HDFC Bank falls on hit to asset quality, loan growth

Reuters July 22 | Updated on July 22, 2019 Published on July 22, 2019

Shares of HDFC Bank Ltd, India's biggest lender by market capitalisation, fell as much as 3.1 per cent per cent to Rs 2,301, their lowest since May 16.

The bank on Saturday reported a 21 per cent rise in June-quarter profit, but said gross NPAs, a measure of asset quality, rose to 1.4 per cent vs 1.36 per cent in the previous quarter.

Provisions jumped 60.4 per cent to Rs 26.14 billion ($378.81 million), due to stress in the bank's agri portfolio.

Loan growth slowed to 17.1 per cent at the June quarter-end, vs 24.5 per cent at the March-quarter end, as advances to the vehicle loan segment moderated.

“Even the bellwether isn't immune to the economic slowdown” , Macquarie Research said.

The stock's wave pattern suggests that it has completed a five-wave uptrend and is in the initial wave of a three-wave correction.

In the near term, shares have support at Rs 2,273.31. However, this correction is expected to continue for a couple of months and the stock is expected to test a support at Rs 1,901.54, the 38.2 per cent Fibonacci retracement level of the entire uptrend.

The stock marked its sharpest intra-day drop since end-May; it was the top drag in the NSE index, which is down 0.74 per cent as of 0427 GMT.

Around 1 million shares changed hands in early trade, vs the 30-day average of 2.6 million shares.

Forty-one of the 46 analysts covering the stock have “buy” or ”strong buy” ratings, 4 have “hold” and 1 “sell”; median PT 2,700 rupees, according to Refinitiv data.

The stock is up 12 per cent this year up to the last close.

Published on July 22, 2019
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