Shares of HDFC Bank have come under sustained pressure in 2026, declining about 25 percent year-to-date from ₹991 to ₹751 on the NSE. The fall follows a mix of leadership changes, governance concerns and post-merger adjustments, even as the bank reported steady business growth in its latest update.
Investor sentiment weakened after the sudden resignation of part-time chairman Atanu Chakraborty on March 18, reportedly over ethical concerns. This was followed by reports of possible action against senior executives linked to alleged mis-selling of additional tier-1 (AT-1) bonds.
Despite the noise, market experts say the controversy is unlikely to materially impact the bank’s financial position.
AT-1 bond issue seen as limited in balance sheet impact
Leadership exit has raised governance concerns
Valuation hit driven more by sentiment than fundamentals
Analysts attribute the stock’s underperformance largely to a “reset phase” after the merger with HDFC Ltd, rather than any structural weakness.
Key pressures include:
Elevated credit-deposit ratio
Margin compression
Slower loan growth as deposit mobilisation takes priority
The bank has also been affected by broader macro trends such as rising crude prices, currency pressures and persistent foreign investor outflows, which have weighed on large-cap financial stocks.
Even as the stock struggles, the bank’s operating metrics remain resilient.
Average advances rose about 10 percent year-on-year to ₹29,644 billion in the March 2026 quarter
Period-end advances grew over 10 percent to ₹30,575 billion
Gross advances increased around 12 percent
Average deposits climbed 12.8 percent to ₹28,511 billion
CASA deposits rose 10.8 percent
These numbers indicate continued balance sheet strength and steady growth in core banking operations.
Market participants remain divided, but many see the correction as a potential entry point for long-term investors.
Experts say the fundamentals of a large institution like HDFC Bank are unlikely to change materially due to a leadership transition. The recent fall, they argue, reflects a combination of temporary factors including merger-related adjustments and global risk aversion.
From a technical perspective, the stock is attempting to stabilise around ₹740–₹750 levels.
Immediate downside risk seen towards ₹680 if support breaks
Resistance expected in the ₹800–₹820 zone
A sustained recovery would depend on improvement in investor confidence and clarity on governance issues.
Analysts broadly view the current phase as transitional, with the bank recalibrating its balance sheet post-merger while navigating a challenging external environment. The long-term outlook remains tied to its ability to manage margins, improve deposit growth and restore market confidence.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies. Investors are advised to consult certified experts before making any investment decisions.
(By arrangement with livemint.com)