HDFC Bank shares dip, falls 4% in October: Can the stock recover?

HDFC Bank's shares experienced a dip of 4% in October, falling from ₹702.75 to ₹684.25 on the NSE following the Reserve Bank of India's decision to raise the repo rate by 25 basis points to 5.50%. The stock opened at ₹704.05 and peaked at ₹705.80 before the rate hike announcement. Since October 1, 2026, the stock has declined 3.7%.

Throughout October, buying interest accounted for 48.29% of the trading volume, with 13,99,456 units purchased, while selling constituted 51.71%, corresponding to 14,98,505 units sold. The traded volume totaled 83.72 lakh shares, with a traded value of ₹585.41 crore. HDFC Bank's market capitalization stands at ₹10.72 lakh crore, and its adjusted P/E ratio is 13.52.

Over the past week, the shares have decreased by more than 3% in absolute terms, and over the month, they have fallen by 0.96%. For the year-to-date, HDFC Bank shares have declined by 29.75%. Bernstein, in its India Financials report, considers India a classic emerging-market banking growth story, with the sector trading at a steep discount despite robust credit growth and near-record profitability.

The brokerage identifies HDFC Bank, ICICI Bank, and Axis Bank as its preferred names, all rated 'outperform'. The key risks identified by Bernstein include market-share battles and excess capital rather than a deterioration in the underlying credit and growth story. Bank of America notes that the policy reset has commenced, signaling a long cycle, and expects the RBI to maintain a hawkish stance, recommending a 100-basis-point hike.

Citi anticipates an additional two 25-basis-point hikes in its base case, suggesting a calibrated tightening stance and a terminal repo rate of at least 6% in the current cycle. Goldman Sachs expects a terminal rate of 6.25%, with a 25-basis-point hike in December and a further 50 basis points of tightening in the first half of 2027.

HSBC expects a 25-basis-point rate hike in December and expects no deep rate hiking cycle. Kotak Securities believes the MPC's shift in stance indicates more rate hikes, albeit a shallow cycle, and anticipates additional 50 basis points of tightening in its base case, with the repo rate expected to rise by 25 basis points in December and February.