HDFC Bank shares surge to day's highs after Q4 updates; Here are three factors why

Shares of HDFC Bank Ltd. recovered over 3% from the lows of the day on Monday, April 6, due to three factors, details of which emerged over the long weekend.

The stock had recovered nearly 3.5% from the lows of the day last Thursday as well, ending over 1% higher, contributing significantly to the 550-point reversal from the lows seen on the Nifty 50 index.

Despite the recovery, the stock ended with losses for the sixth straight week. Here are the three factors why the stock is in focus today:

Strong Q4 Business Update

HDFC Bank reported its business update for the March quarter over the long weekend, which turned out to be above expectations, along with a decline in the Credit-Deposit ratio (LDR) as well.

The lender's gross advances grew by 12% from last year to ₹29.6 lakh crore during the March quarter, while deposits grew 14.4% from thee year-ago period to ₹31.05 lakh crore.

Credit-to-Deposit ratio also declined to 95.31% from 98.5% sequentially, with the bank having made its intent clear to bring it down over the medium term multiple times in the past.

CASA deposits increased by 10.4% from last year to ₹9.18 lakh crore during the March quarter, while CASA Ratio increased by 54 basis points sequentially to 34.1%.

March Quarter Shareholding

HDFC Bank also shared its March quarter shareholding pattern with the exchanges recently, which saw significant changes.

Foreign Portfolio Investors (FPIs), which own a significant stake in the lender, were sellers of the stock during the March quarter, which also explains the fall seen in the stock last month, leading it to the worst month in six years.

FPI stake fell to 44.05% from 47.67% at the end of the December quarter. Majority of that stake sold was lapped up by domestic mutual funds, whose stake increased to 29.54% in March from 26.66% in December.

A major change was seen in the retail shareholding. Shareholders with authorized share capital of up to ₹2 lakh, whose shareholding had dropped to a 20-quarter low in December, saw an increase, albeit modest, to 9.87% in March from 9.41% in December.

The number of retail shareholders holding the stock also went up to 41.1 lakh in March from 35.39 lakh in December.

Sharp Jump In MTF Positions

HDFC Bank has now become the most leveraged stock on the Margin Trading Facility (MTF) book, according to data available on the NSE.

As of April 1, the MTF positions on HDFC Bank stood at ₹1,518 crore, a 47% jump from the ₹1,029 crore at the end of February.

Shares of HDFC Bank are now trading 2.1% higher at ₹766.5. The stock is currently in "bear market" territory, having corrected 26% from their recent 52-week high of ₹1,020. Despite the fall in the stock, majority of the analysts tracking it, continue to maintain a "buy" recommendation, with no "sell" ratings.

(With Inputs From Ritu Singh and Annanya Singh)

Also Read: HDFC Bank falls from world’s most expensive lender to deep discount play