India's top private bank enters bear zone: Buy or wait?
What's the story
HDFC Bank's shares have been on a downward spiral, falling another 4.4% this week after a 4.7% decline last week. The bank's part-time Chairman Atanu Chakraborty's resignation over ethical concerns has further fueled the slump. This marks the fourth consecutive weekly loss for India's largest private lender, which has seen declines in five out of the last six weeks.
Market performance
Stock enters 'bear market' zone
The stock has breached all major moving averages and is deep into "oversold" territories. The Relative Strength Index (RSI) for HDFC Bank now stands at 24, with anything below 30 indicating an "oversold" condition. This technical analysis suggests that the stock has entered a "bear market" zone, defined as a decline of 20% or more from its peak value.
Stock analysis
Brokerage firms maintain 'buy' rating on HDFC Bank
HDFC Bank's shares hit a 52-week high of ₹1,020 on October 23 last year. However, they have since dropped by 22%. Despite the decline, brokerage firm Jefferies has kept its "buy" rating for HDFC Bank with a price target of ₹1,240. This indicates an upside potential of 59% from current levels. Motilal Oswal also maintained its "buy" rating on the stock with a price target of ₹1,100.
Year-to-date performance
Worst quarter for HDFC Bank since January-March 2020
HDFC Bank's shares are currently trading at ₹781, down 2.2% on Friday. The stock has fallen by a whopping 21% in the first quarter of this year, making it the worst quarter for HDFC Bank since January-March 2020 when it had plummeted by 32%. Despite the current slump, a majority of analysts remain optimistic about HDFC Bank's future performance with 45 out of 47 maintaining a "buy" rating on the stock.