HDFC Bank shares surged on Friday, hitting a 52-week high of Rs 1996.30, driven by optimism in loan growth after the Reserve Bank of India RBI reduced the repo rate by 50 basis points, bringing it down to 5.5 percent. This marks a cumulative 100 basis points cut since February's monetary policy review.

Monetary policy boost for credit growth

Market participants viewed the RBI’s decision as positive for banks, particularly HDFC Bank, which is expected to benefit from a cheaper cost of funds and increased credit demand.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said the monetary policy easing is supportive of loan book expansion. He encouraged long-term investors to hold the stock, and advised new entries on any dips.

Analyst commentary and technical outlook

Ravi Singh, Senior VP of Retail Research at Religare Broking, stated that the scrip could target Rs 2050, with Rs 1950 acting as immediate support. He suggested investors place a stop loss at Rs 1950.

Jigar S Patel, Senior Manager at Anand Rathi, echoed similar views. According to him, support lies at Rs 1950 and resistance at Rs 2000. A decisive breakout above Rs 2000 could open room for further upside towards Rs 2050 in the short term. The expected trading range is Rs 1900 to Rs 2050.

Momentum backed by strong technical indicators

The stock is currently trading above all major short and long-term moving averages – the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day SMAs.

The 14-day Relative Strength Index RSI stands at 65.32, indicating bullish momentum. An RSI above 70 is considered overbought, while below 30 is oversold, placing the stock currently in neutral-to-bullish territory.

Valuation metrics and stability

From a fundamental perspective, HDFC Bank has a price-to-earnings P E ratio of 22.93, with a price-to-book value of 3.30. Its earnings per share EPS is Rs 86.57, and return on equity RoE stands at 14.39 percent.

According to Trendlyne, the bank has a one-year beta of 0.9, implying lower volatility compared to the broader market. This reinforces HDFC Bank’s image as a defensive, low-risk stock for conservative investors.

Investment outlook and market sentiment

HDFC Bank continues to be one of the most respected private lenders in India, with robust fundamentals and strong asset quality. The repo rate cut and subsequent liquidity boost have strengthened the outlook for retail and corporate lending, particularly during the upcoming festive season.

Analysts expect credit offtake to improve, supported by declining borrowing costs, potentially improving net interest margins and earnings visibility.

With the stock breaking out to a new one-year high, momentum-driven traders are likely to stay active, although some profit-booking may occur at resistance levels. However, given its strong fundamentals, low beta, and technical strength, HDFC Bank remains an attractive candidate for medium to long-term portfolios.

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