- FUNDAMENTAL ANALYSIS
- TECHNICAL ANALYSIS
FUNDAMENTAL ANALYSIS
HDFC
Bank has demonstrated a strong financial performance in FY 2023-24, marked by
significant growth in revenue and profitability, despite some challenges in
asset quality. Here's an analysis incorporating the latest data:
Quarterly
Financial Performance
In
the third quarter ending December 31, 2024, HDFC Bank reported a standalone net
profit of ₹16,735.5 crore, aligning with market expectations. The bank's net
interest income (NII) rose to ₹30,653 crore, a 2% increase from the previous
quarter. However, there was a slight contraction in the core net interest
margin (NIM), which decreased to 3.43% from 3.46% on total assets to 3.62%
from 3.65% on interest-earning assets.
Asset
Quality and Provisions
The
bank's asset quality experienced some deterioration during this period. The
gross non-performing assets (GNPA) ratio worsened to 1.42% from 1.36% in the
previous quarter, primarily due to increased agricultural loans turning
non-performing. Additionally, slippages rose to ₹8,800 crore from ₹7,800 crore
in the prior quarter. Consequently, provisions for bad loans and other
contingencies increased by 17% to ₹3,154 crore.
Balance
Sheet Highlights
As
of September 30, 2024, HDFC Bank's total balance sheet size stood at ₹34.2 lakh
crore, reflecting a 53.3% increase compared to the same period in the previous
year. Deposits grew by 29.8% to ₹21.72 lakh crore, while gross advances surged
by 57.7% to ₹23.54 lakh crore.
Shareholding
Pattern
As
of the latest available data, the shareholding pattern of HDFC Bank is as
follows:
Promoters:
25.8%
Foreign
Institutional Investors (FIIs): 39.4%
Domestic
Institutional Investors (DIIs): 18.2%
Public
and Others: 16.6%
This
diversified shareholding structure indicates strong institutional interest in
the bank.
Investment
Outlook
HDFC
Bank's robust financial performance, characterized by consistent revenue growth
and profitability, underscores its position as a leading private-sector bank in
India. However, investors should remain vigilant regarding the slight
deterioration in asset quality and monitor the bank's strategies to mitigate
risks associated with non-performing assets. Overall, the bank's fundamentals
continue to present a compelling case for long-term investment.
TECHNICAL ANALYSIS
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| Figure 1 |
Looking at the HDFC Bank Ltd. quarterly chart spanning from 1999 to
early 2025, we can observe a remarkable long-term growth story with several key
technical features:
The chart shows HDFC Bank's impressive journey from its IPO price of around
Rs. 7 in 1999 to its current level. The stock has maintained a strong uptrend
over 25+ years, with the price increasing from single digits to over Rs. 1,880 at
its peak.
A significant correction occurred in 2020 during the COVID-19 pandemic,
dropping about 20% to Rs. 738 levels. The stock recovered strongly post-2020,
eventually reaching near Rs. 1,900. The most recent price action shows some
consolidation and a slight pullback near all-time highs.
Regarding what might come next, the chart shows the stock in a long-term
uptrend but experiencing some resistance near its all-time highs. Technically,
the stock appears to be in a consolidation phase after a multi-decade bull run.
Elliott Wave analysis may reveal the next directional move.
 |
| Figure 2 |
Looking at this HDFC Bank Ltd. monthly chart with Elliott Wave
annotations, we can see a clear five-wave impulse structure that aligns
perfectly with the Elliott Wave Theory:
The starting point of wave (1) near the IPO in 1999 established the
base from which the entire Elliott Wave pattern developed.
Wave (5), the final impulse wave in the sequence, shows the current
upward movement from 2020 to the present, reaching new all-time highs around Rs.
1,880.
According to Elliott Wave principles, after a complete five-wave impulse
structure, we should expect a three-wave corrective pattern (ABC correction).
This chart beautifully illustrates how HDFC Bank has followed the
classic Elliott Wave pattern during its 25+ year journey, with each wave
demonstrating the psychological phases of market participants from accumulation
to euphoria.
 |
| Figure 3 |
This
HDFC Bank Ltd. weekly chart presents a more detailed Elliott Wave analysis with
multiple degrees of wave patterns. The chart shows a complex wave structure
spanning several years.
The
primary Elliott Wave pattern shows the larger degree waves labelled as (1),
(2), (3), (4), and (5) with distinct nested sub waves within wave (3). This
aligns with the importance of identifying the five sub-waves within wave three
(3).
Wave
(3) is indeed the extended wave in this pattern, containing a complete five-sub
wave of its own (labelled in green as 1, 2, 3, 4, 5)
Within
the green subwave 5, we can see further subdivision into five smaller waves (labelled
in red as i, ii, iii, iv, v). This multi-degree wave analysis demonstrates
fractal-like properties with waves of its own five sub-waves.
 |
| Figure 4 |
In
the chart above, HDFC Bank appears to have completed an extended fifth wave,
marking a potential turning point for the stock. If our Elliott Wave analysis
is correct, the price may now enter a significant corrective phase.
The
extended fifth wave, labelled in black, consists of five distinct sub-waves: i, ii, iii, iv, and v (in blue).
This confirms the completion of the primary uptrend. Notably, wave iv is a three-wave
corrective structure, labelled A-B-C (in red), and the final fifth wave v (in
blue) peaked at ₹1,757.50.
If
the wave count holds, HDFC Bank is poised for a major corrective decline. This
correction could unfold in a large A-B-C pattern, following the blue downward
arrow in the chart. The anticipated path suggests a potential drop toward lower
price levels, possibly below ₹1,000, before any meaningful recovery.
An
alternative scenario also exists, which is further analysed in the next image.
 |
| Figure 5 |
In the previous chart, we saw that the fifth wave ended at Rs
1757.50 and is forming a corrective wave, but let's assume that the fifth wave
does not end at Rs 1757.50 and forms
another structure, so let's see what the anticipated move of the stock will be.
The
given chart suggests that HDFC Bank is forming a ending diagonal within its
fifth wave. This structure indicates a prolonged consolidation before a final
move up, followed by a major correction.
The
stock has been forming its final fifth wave (“v” in blue), but instead of a
direct uptrend, it is developing into a ending diagonal pattern.
The
A-B-C-D-E pattern within the triangle suggests that the stock is consolidating
in a sideways range.
Waves
A and C represent upward price movements, while B and D are corrective
declines.
Currently,
the price seems to be in wave D, which may dip toward the lower boundary of the
triangle before a final rally in wave E.
Potential
Future Moves:
Once
wave E is complete, the stock is expected to break down sharply, leading to a
major correction.
The
downside target could be below ₹1,000, aligning with typical post-triangle
breakdown behaviour in Elliott Wave Theory.
This
analysis suggests a period of range-bound movement followed by a sharp decline.
Monitoring price action near wave D and E levels will be crucial for confirming
the next major move.
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| Figure 6 |
The
monthly chart confirms the Elliott Wave pattern seen in the weekly chart but
with a broader perspective. It highlights an ending diagonal formation within
wave (5), suggesting that the stock is in an extended consolidation phase
before a potential major correction. This analysis suggests that HDFC Bank may
experience one final rally before a significant long-term decline.
Disclaimer:
I am not a SEBI-registered financial advisor. The analysis and views shared
here are purely for educational and informational purposes and should not be
considered as financial advice or investment recommendations. Trading and
investing in the stock market carry a high level of risk, and past performance
is not indicative of future results. Readers are strongly encouraged to consult
with a certified financial advisor or SEBI-registered professional before
making any financial decisions. I am not responsible for any losses incurred
based on the information provided.