HDFC Bank: Bearish bets on HDFC Bank rise to record levels

Mumbai: Bearish bets on stock futures of HDFC Bank, India’s most valuable lender, are at the highest level ever as concerns that the firm’s profitability is under pressure are seen weighing down its share price.

Total open interest, or outstanding positions, in HDFC’s stock futures has surged by 115% to 4.19 lakh contracts – a record build-up – after its third-quarter results with most of them being short positions, said Ruchit Jain, lead research analyst at 5Paisa.com.

The stock declined 0.7% to close at ₹1,384.9 on Wednesday, its lowest level in the last 52 weeks. Since the announcement of the December quarter results on January 16, the share price has declined over 21.3% as against the 4.82% drop in the Bank Nifty index

“We see the shares of HDFC Bank being under pressure due to net interest margins (NIM) falling further in the third quarter, along with a shift from CASA (Current Account, Savings Account) to term deposits, which impact the cost of funds and margins of the bank,” said Shrikant Chouhan, head of equity research at Kotak Securities.

In the options segment, HDFC Bank call and put contracts have seen the highest build-up at 1,400 strike.

Analysts said options data suggests that HDFC Bank could face a strong hurdle at ₹1,440 level.”1440 is the maximum pain area based on Call-Put data, which if crossed, will lead to a short covering of positions,” said Rajesh Palviya, head of technicals and derivatives at Axis Securities.Palviya said the level is unlikely to be breached soon, given the weak outlook for the bank that has resulted in a major selloff from funds.

Jain said if the stock crosses the ₹1,400 level, it could lead to a short covering, which may drive a rebound in the stock. This could also push up the Bank Nifty index, in which HDFC has the highest weight.

(You can now subscribe to our ETMarkets WhatsApp channel)

(What’s moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Download The Economic Times News App to get Daily Market Updates & Live Business News.

Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

Source link

Denial of responsibility! NewsConcerns is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a Comment