HDFC Bank Shares Bounce Back After Sharp Correction

HDFC Bank shares saw a recovery on 24 March, Tuesday, rising up to 3.2% to ₹768 during the day on the Bombay Stock Exchange (BSE).

The bounce came after four sessions of decline, during which the stock had fallen about 12% and wiped out nearly ₹1.6 lakh crore in market value.

The fall was triggered by the resignation of part-time chairman Atanu Chakraborty, which raised questions among investors and led to heavy selling.

Today, 24 March, at 10:28 AM, the HDFC Bank shares were trading at ₹757 at the National Stock Exchange (NSE).

What Raised Questions?

Chairman Chakraborty, resigned on 18 March, claiming that certain practices at the bank in the last couple of years were not in line with his personal values and ethics. The phrasing of the letter caused many to wonder about internal problems.

The bank later stated that there were no other reasons for the resignation beyond what was mentioned.

The Reserve Bank of India (RBI) also indicated that it did not see any material concerns regarding the bank’s governance or conduct.

Keki Mistry has been appointed as interim part-time chairman for three months. He addressed concerns around internal differences, saying that such matters arise occasionally and are not significant in this case.

The bank has appointed external law firms to review the circumstances around the chairman’s exit.

What Added To Market Attention?

Around the same time, reports emerged that the bank had removed its group head of retail branch banking, Sampath Kumar, along with two other senior officials.

The action was linked to alleged mis-selling of Credit Suisse AT1 bonds. The bank subsequently confirmed these departures.

SEBI Chairman Tuhin Kanta Pandey also remarked on the matter.

He said that independent directors should take their responsibilities seriously and refrain from making statements that may cause confusion without having enough grounds for it.

Also Read - India Resilient To Global Shocks, Iran Crisis Needs Vigilance: RBI

What Investors Can Expect Next?

The next few weeks are likely to be driven by updates rather than results. Any findings from this review may help settle some of the concerns.

Investors might also look for stability at the board level. The appointment of a permanent chairman after the interim period could provide some reassurance.

For now, the share might get influenced by any news. However, in the long run the focus will probably shift back towards the bank's main operations, such as growth, asset quality, and margins.

Sources:

ET

Hindustan Times