HDFC Bank shares today: What is driving the stock lower

On Tuesday, HDFC Bank shares experienced a decline, trading at ₹724.50 on the NSE from its prior close of ₹729. By 10:28 am, the stock was at ₹727.30, fluctuating between ₹724.50 and ₹728.70 during early trade. As of the report's publication, buy quantity stood at 9,14,695 compared to sell quantity of 15,80,297, as per NSE data.

The total traded volume was 23.65 lakh shares, with a traded value exceeding ₹172 crore. HDFC Bank's market capitalization reached ₹11.21 lakh crore, with an adjusted P/E ratio of 14.02. The stock had hit a 52-week low of ₹715.10 on August 19, 2026. Over the past week, the stock's absolute returns were 0.62 percent, while over one month, it decreased by 2.06 percent.

JM Financial, which assessed HDFC Bank's FY26 performance based on annual report disclosures, noted that asset quality improved in retail and services sectors, with agriculture emerging as a significant stress area. While balance-sheet risk trends were mixed, the brokerage highlighted reduced borrower and NPAs concentration, a higher share of better-rated corporates, and a decline in legacy e-HDFC borrowings as positive factors.

However, increased exposure to commercial real estate, capital market loans, and contingent liabilities were identified as key negatives. The brokerage maintained an "add" rating on HDFC Bank and revised its target price to ₹800 from ₹900 earlier. JM Financial highlighted stable asset quality trends during FY26 but noted a deterioration in stress levels across agriculture portfolios, driven by higher delinquencies in animal husbandry and select PSL segments.

Credit costs in agriculture also increased, warranting monitoring as the bank transitions to the ECL framework. On the balance-sheet risk front, borrower concentration continued to decline, with a reduced share of the top 20 borrowers, while stressed asset concentration decreased sharply. Unsecured loans remained stable at ~21.5 percent of advances, while A-and-above rated corporate exposures increased in FY26.

However, commercial real estate and capital market exposures rose to 7.3 percent and 2.7 percent of loans, respectively. Contingent liabilities surged by ~29 percent year-over-year in FY26, primarily due to a jump in forward exchange contracts. JM Financial noted that retail deposit share declined further, with HDFC Bank relying more on Certificate of Deposit issuances to meet funding needs.

The bank's LCR moderated to 114 percent, and legacy e-HDFC borrowings continued to decline, with 20 percent of these borrowings eligible for repricing over the next two years. HDFC Bank gained 33 basis points in overall deposit market share. The brokerage attributed stronger organic PSL growth to improved compliance and reduced drag from RIDF balances, with RIDF as a percentage of loans declining to 3.2 percent from 4.1 percent in FY25.

Non-interest income growth was bolstered by treasury and investment gains, including the HDB Financials stake sale, while underlying fee income moderation led payments, third-party products, and investment management.