Shares of HDFC Bank Ltd. erased all the losses to turn positive for this year after the stock has rallied up to 12% in the last one month. The stock also contributed 64 points to the Nifty's 120 points rally today.
The stock has risen 25% from its 52-week low level of ₹1,363.55, hit on February 14 this year. This is the best month for the country's largest largest private sector lender since December last year, during which HDFC Bank shares had gained 9.6%.
A double-digit return this month for the lender would make it the best month for the stock since August 2021.
The recent rally in HDFC Bank has also taken the stock into overbought territory on the charts. The stock is now trading with a Relative Strength Index (RSI) of 72.3. An RSI reading above 70 means that the stock is in overbought territory.
HDFC Bank shares gained 2% in today's trade after global brokerage firm Bernstein continued with its 'Outperform' rating on the counter with a target price of ₹2,100 per share. The set target implies an upside of 26% from the previous close.
The foreign brokerage wrote in a note that the lender is well positioned to regain its industry leading profitability over the next four years.
Bernstein expects HDFC Bank's return on asset (RoA) to improve from 1.8% to 2.1% in the next four years, driven by loan mix improvement. The improvement in RoA will also be driven by cost of funds normalisation.
Further, the brokerage said that operating leverage will also start to kick in over the next few years.
Technical analyst Manas Jaiswal expects HDFC Bank to potentially outperform other private banks in the coming years.
Speaking to CNBC-Awaaz, Jaiswal said that one must hold on to their positions in HDFC Bank if they are holding them. He advises maintaining a stop loss of ₹1,500.
The analyst also said that HDFC Bank is ready to scale back to its previous highs of ₹1,757.50. "The stock might also breach its level of 1,750 and move towards ₹1,850. Investor may see an upmove of ₹100-150," Jaiswal said.
