HDFC Bank shares to surge to ₹2,150 after rising 13% in a month, says this analyst

Shares of HDFC Bank Ltd. gained as much as 4% to hit a record high of ₹1,794 per share on the NSE on Wednesday (July 3) after its US-listed shares rallied nearly 4% in the overnight trade.

On the charts, technical analyst Manas Jaiswal recommended investors to set HDFC Bank target at ₹2,100 to ₹2,150 level.

Answering a viewer query on CNBC Awaaz, Jaiswal suggested that investors should consider buying HDFC Bank stock on dips. He identified ₹1,650 as a strong support level and advised setting a stop loss just below this level.

The analyst had earlier said that HDFC Bank is expected to outperform other private banks in the coming years.

Technical Analyst Mitessh Thakkar also expects more upside in HDFC Bank. “This stock has just made a fresh high. With the news, with the gap up, this should see continuation even if there is a pullback for 1-2 days. I would be a buyer on declines over here or if it starts getting past ₹1,800 then look at a target of ₹1,900 or thereabouts,” Thakkar said.

The stock hit an all-time high today on prospects of billions of dollars in inflows in case of a potential weightage increase on the MSCI indices.

On Tuesday evening, the private sector lender released its shareholding pattern for the June 2024 quarter. The shareholding pattern saw Foreign Portfolio Investors’ holding decline further as against the March quarter. The resultant decline may result in the lender getting inflows between $3 billion to $4 billion as its weightage in the MSCI indices stands to increase from current levels.

At present, HDFC Bank’s weightage in the MSCI Emerging Markets index stood around 3.8%. After the rejig, that weightage may rise to anywhere between 7.2% to 7.5%, potentially bringing in inflows between $3.2 billion to $4 billion across six days, as per a base case scenario from Nuvama Alternative and Quantitative Research.

The increased FPI headroom can lead to passive flows between $2.8 billion to $3 billion in shares of HDFC Bank, according to Sriram Velayudhan of IIFL Securities. Velayudhan expects another 4% to 6% upmove in the stock.

Shares of HDFC Bank were one of the worst performers in the bluechip Nifty pack in the last year as investors remain worried about the negative impact of its reverse merger with parent HDFC Ltd.

The stock was the top contributor to the Nifty upside as had been the case on Tuesday as well. More than half of the Nifty’s 135-point move is coming from HDFC Bank, who is currently contributing 77 points to the gains.

HDFC Bank shares were also the top contributor to the Nifty Bank’s upside. Out of the 950-point move that the index has been witnessing currently, about 550 points are coming from HDFC Bank. The index hit a record high of 53,201 today, surpassing its earlier record of 53,180.