Data show that shares of HDFC and HDFC Bank are down 10 percent and 9 percent from their one-year peak. Equity benchmark Sensex is also 9 percent down from its one-year (also the all-time) high of 63,583.
However, they are still better than their peers from the group shares of HDFC Asset Management Company are down over 29 percent from their 52-week high level while those of HDFC Life Insurance Company are down nearly 20 percent from their one-year high.
If we consider the last one year's data, shares of HDFC and HDFC Bank have in fact outperformed the benchmark Sensex. While the Sensex is flat for the period, shares of HDFC are up more than 9 percent and those of HDFC Bank are up 6 percent.
However, shares of HDFC Life Insurance Company are down over 5 percent and those of HDFC Asset Management Company have plunged 21 percent in the last one year.
In sync with the market mood
Heavyweights HDFC and HDFC Bank have moved in sync with the market in recent times. In the last one year, they have outperformed the benchmark despite clocking sombre gains, thanks to the prevailing market situation due to sticky inflation, rate hikes and global cues.
Analysts do not appear disappointed with their performance.
"Since the beginning of the year 2023, the market has underperformed, and HDFC group stock has been falling. Uncertainty in the market is a result of rising inflation and recent news of bank failures in the US. Although there is market risk everywhere, I don't see anything bad for the stocks of the HDFC group, which is why their stock price is experiencing selling pressure," said Rameshver Dongre, Research Analyst - Equity Research at CapitalVia Global Research.
Aamar Deo Singh, Head of Advisory at Angel One observed that HDFC group stocks, primarily HDFC and HDFC Bank have been under pressure, on the back of margin concerns and moderating growth, coupled with the overhang related to the merger.
Besides, the firming up of interest rates on home loans also weighs heavily while negative global sentiments have also impacted the financial sector.
Meanwhile, the National Company Law Tribunal (NCLT) approved the merger of HDFC and HDFC Bank on March 17.
As Mint reported, HDFC has already received approvals from the Reserve Bank of India, Securities and Exchange Board of India (Sebi), PFRDA and Competition Commission of India (CCI) as well as from India's stock exchanges - BSE and NSE - for the merger.
The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of FY24. The merger was announced in April 2022.
Time to buy?
Analysts advise buying stocks of HDFC and HDFC Bank on corrections as they remain upbeat on their prospects post-merger.
Singh of Angel One said investors should explore buying opportunities on meaningful corrections, as post the merger, the HDFC twins are expected to gain a lot on synergies and economies of scale.
"Given the growth expectations of India Inc. in years to come, the HDFC group stands well placed to capitalize on the same. So, from a long-term perspective, one should invest and hold onto existing stocks," said Singh.
"Both the stocks are in a trading range, with HDFC in a consolidation zone, between ₹2,200-3,000 whereas HDFC Bank has a range of ₹1,250 – 1,720 in the near term," Singh said.
As per Dongre, technical indicators are favouring HDFC and HDFC Bank stocks for the short term.
"On the long-term chart, HDFC Bank and HDFC are both close to their major supports and are maintaining positions above the 200-day simple moving averages (SMA). New positions can also be started in HDFC and HDFC Bank from this area of demand," Dongre said.
"Technically, HDFC Bank has a support range of ₹1,550-1,525, where new buying positions can be initiated with a stop loss at ₹1,380 and targets of ₹1,800 or higher. Similar to that, I have a buy view on HDFC starting from the support range of ₹2,530–2,550 with a stop loss of ₹2,340 and a target price of ₹2,900+ levels," said Dongre.
According to a MintGenie poll, an average of 36 analysts have a ‘strong buy’ call on HDFC Bank while an average of 24 analysts have a ‘strong buy’ call on HDFC.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.