HDFC Bank’s shares take steepest single-day fall in 21 months – News Air Insight

Mumbai: HDFC Bank, which accounts for nearly an eighth of the Nifty by weighting, slumped more than 5% at close Thursday in the stock’s steepest single-day drop in 21 months after non-executive chairman Atanu Chakraborty abruptly resigned, citing “practices… not in congruence with my personal values and ethics.”

Analysts said the exit, coupled with uncertainty surrounding the term renewal of the incumbent CEO, may keep the stock under pressure in near term despite mouthwatering valuations. CEO Sashidhar Jagdishan’s second term ends in October.

The stock ended 5.3% lower at ₹798.2, its weakest close since August 2024, erasing ₹69,026 crore in market value. It had fallen to ₹770 apiece at the start of the day. The Nifty 50 fell 3.3% to 23,002.15. HDFC Bank has the strongest influence on the index movement with an 11.83% weight.

Brokerage Macquarie said the stock may continue to underperform in the near term.

“While fundamentals remain strong with good ROA, at this point in time governance concerns will weigh down heavily on the stock,” the brokerage wrote. “Investors would want more comfort from the board. Also now the uncertainty surrounding Sashi’s reappointment will weigh down on the stock.”

Macquarie has an ‘Outperform’ rating on the stock with a target price of ₹1,200.

Brokerage Bernstein noted that while the stock is already trading at or below Covid-era valuation levels, recovery from governance-related concerns will be neither quick nor easy. “Investors will likely wait to ensure that this doesn’t trigger any investigations from regulators that could take longer to conclude,” Bernstein said. The firm has a target price of ₹1,150. Technically, the stock may see some relief after sharp sell-off. HDFC Bank has dropped 24% over the past four months and has breached key support zones at ₹860 and ₹840.

“Momentum indicators are now in oversold territory, suggesting a potential pullback,” said Rohan Shah, technical analyst at Asit C Mehta Investment Intermediates. “But failure to sustain above ₹840 could renew selling pressure, with downside risk towards ₹750-730 over the coming weeks.”

He added that weakness in the broader Bank Nifty and the overall market could add to the drag.

At current valuations of about 1.7 times FY27 price-to-book, the stock offers an attractive entry point, said Sunny Agrawal, Head of Fundamental Research at SBI Securities. who has a target price of ₹1,100.

“The management clarified on Thursday that the resignation was solely due to personal relationship issues between chairman (non executive) and leadership team and does not impact the bank’s business performance or underlying values and ethics,” he said. “With RBI reaffirming the bank’s fundamentals and Keki Mistry returning to the board, we believe investor confidence should stabilise.”