HDFC Bank shares declined nearly 2% in early trade on Tuesday, snapping a three-day winning streak that followed the appointment of Keki Mistry as the new part-time chairman. The stock opened at ₹1,750, down from the previous close of ₹1,785, and fell further to an intraday low of ₹1,752.
Three-Day Rally Erased
The bank's shares had rallied over 5% in the three sessions prior to Tuesday, after the board announced Mistry's appointment on June 27. The appointment filled the vacancy left by former chairman Deepak Parekh, who stepped down after reaching the age of 75. Market analysts attributed the earlier gains to investor optimism about Mistry's experience and the bank's stable leadership.
However, profit-booking and broader market weakness weighed on the stock today. The BSE Sensex was trading 0.3% lower, with financial stocks among the top losers.
Impact of Leadership Change
Keki Mistry, a veteran in the financial sector, previously served as vice chairman and CEO of HDFC. His appointment is seen as a move to ensure continuity in governance. According to a note from Motilal Oswal Financial Services, "Mistry's deep understanding of the housing finance and banking sectors should help HDFC Bank navigate the current economic environment."
The bank's net profit for the March quarter rose 18% year-on-year to ₹12,000 crore, supported by strong loan growth and stable asset quality. Analysts expect the new chairman to focus on digital expansion and cost efficiency.
Market Sentiment and Outlook
Despite today's fall, HDFC Bank shares are up 12% year-to-date, outperforming the Nifty Bank index which has gained 8%. The stock trades at a price-to-earnings ratio of 20, slightly above its five-year average of 18.5. Some analysts believe the valuation is justified given the bank's consistent performance.
"The correction today is a healthy consolidation after the recent run-up," said an analyst at ICICI Securities. "We maintain a 'buy' rating with a target price of ₹1,900."
Investors will watch for the bank's quarterly earnings in July, which will provide further cues on its growth trajectory under the new chairman.
