Is it wise to purchase more or book a profit now that the HDFC Bank share price seems to be ending its seven-day winning streak?

The price of HDFC Bank's shares fell by more than 1% on the NSE after seven straight days of increases. The stock has increased by 7% during the last seven sessions, but only by 4% over the previous year. The market benchmark Nifty 50 saw a decline from a new high as well.

On February 14 of this year, the price of HDFC Bank's shares fell to ₹1,363.55, a 52-week low. Since then, there has been a notable 22% increase in the stock price. (Stock)

On Friday, June 21, early trading on the NSE saw a more than one percent decrease in shares of HDFC Bank, the industry leader in banking, after seven straight sessions of increases. In contrast to its previous closing of ₹1,669.35, the HDFC Bank share price began with a little increase of around 0.21 percent at ₹1,672.85. However, profit booking caused the share price to drop by almost 1.5% to ₹1,644.85 very quickly.

The market's benchmark Nifty 50 lost all of its gains and decreased by 0.3% after reaching a new high of 23,667.10.

The previous seven sessions have seen an almost 7% increase in the price of HDFC Bank shares. But the stock's performance over the last year has been very dismal. Compared to the benchmark Nifty 50, which has earned a respectable 25% over the last year, it has only gained 4%.

This year on February 14, HDFC Bank's shares fell to ₹1,363.55, its 52-week low. Since then, there has been a notable 22% increase in the stock price. The stock reached its 52-week high on July 3 of last year, which was around a year ago, at ₹1,757.50.

Regarding value, the stock's present price-to-earnings (PE) ratio is close to 20, above its one-year median PE of 18.

The biggest bank in India in terms of market capitalization, Q4FY24 saw a standalone net profit of ₹16,512 crore, up from ₹16,373 crore in the December quarter before.

Due to the July merger of HDFC Bank and its parent company Housing Development Finance Corporation (HDFC), the earnings were not comparable from year to year.

Even though the company is now seeing significant profit booking, experts think the stock may reach new heights because to the expectation that it might draw in MSCI inflows of $3.5–4 billion if its weight doubles on the MSCI India Index.

"It's unclear whether the MSCI weight increase will occur in August, but in the lead-up, sentiment may push the stock to all-time highs until shareholding is announced in the first week of July," said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research.

At this point, what should investors do with the stock? Should they make a profit or acquire more? We spoke to technical and fundamental analysts to obtain their opinions on the stock. They said the following:

core beliefs

Chairman & MD of Inventure Growth and Securities Ltd. is Kanji B. Rita.

The expert said that the next index rebalance, which is scheduled for August 2024, is projected to quadruple HDFC Bank's weight in the MSCI India Index, potentially shredding all of the overhang throughout stock price movement.

The bank's Q4FY23–24 quarterly earnings were in line with street predictions. With ₹25,078 billion in gross advances, there was a 1.6% quarterly (QoQ) increase. At ₹23,798 billion, deposits increased 7.5% on a quarterly basis. The return on assets was two percent, while the margin was 3.4%. The bank's 1.24 percent gross non-performing asset (NPA) improved asset quality as well.

"From a valuation standpoint, HDFC Bank is in a stronger position, and its book value has increased over time. It still holds the top spot in the retail lending industry. Effective July 1, 2023, HDFC Bank and HDFC Limited amalgamated. The liquidity issue is resolved after the merger by expanding reach and energizing branch networks in rural and semi-urban regions, according to Kanji.

"Considering the aforementioned triggers, we advocate a 'buy' on HDFC Bank as well as assign a 12-month target price of ₹2,323," Kanji said.

Amit Goel, Pace 360's co-founder and chief global strategist

Because of its solid track record, sizable client base, and established position in the Indian banking industry, HDFC Bank is regarded as a long-term investment option.

The biggest bank in the private sector, HDFC Bank is well-known for its ambitious expansion plans and first-rate client care. The bank's stock prices may be impacted by variables including asset quality, loan growth, and financial performance.

"The PE of HDFC Bank is 19.60. Goel advised investors to book gains due to the widespread overvaluations in the market as a whole.

technical perspectives

Jigar S. Patel, Anand Rathi Share and Stock Brokers' Senior Manager of Equity Research

According to Patel, in the past, HDFC Bank has faced significant resistance near the ₹1,700 mark, which often causes the stock price to undergo significant adjustments. HDFC Bank is now trading at ₹1,650, which is just about 30 to 35 points away from the crucial ₹1,700 zone.

We urge traders and investors not to open fresh long positions in HDFC Bank because of this level of historical resistance and the stock's present closeness to it. Instead, if the stock hits the ₹1,700–1,710 level, it would be wise to book gains," Patel said.

Mandar Bhojane works at Choice Broking as an equity research analyst.

Bhojane claims that the stock has been poised to breakout on the daily chart, with a notable rise in trading volume suggesting that a breakthrough may be imminent.

"The price could be able to hit the ₹2,000 short-term objectives if it closes above the ₹1700 mark. Conversely, ₹1550 is where the immediate support levels are placed. These levels provide chances to purchase on dips, according to Bhojane.

With a current value of 64 and an upward trend, the Relative Strength Index (RSI) suggests growing purchasing enthusiasm.

For investors targeting a price objective of ₹2,000, HDFC Bank shares seems to be a compelling investment, provided that suitable risk management strategies are implemented. In order to handle risk sensibly, ₹1,500 should be the stop loss level. In the event of an unanticipated market downturn, this measure will assist safeguard your money," Bhojane stated.