HDFC Bank shares rise 2% ahead of Q2 results. What should investors do?

HDFC Bank shares jumped over 2% in early trade as the country’s largest private lender prepares to announce its Q2 results on October 16. The stock was trading 2.11% higher at Rs 1,685 on the Bombay Stock Exchange (BSE), contributing significantly to the early gains on Dalal Street. Investors are showing increased interest in HDFC Bank shares, anticipating a positive performance in the upcoming quarterly results.
Brokerage firm Arihant Capital, which maintains a buy rating on the stock, noted that it has been trading sideways after a six-day losing streak. The firm predicts a “pullback rally” and highlighted that the momentum indicator (RSI) is showing positive signs, suggesting further upward movement.
Arihant Capital recommended buying the stock at the current level with a stop loss of Rs 1,600 and a target range of Rs 1,751-1,800 in the next few weeks.
Earlier in October, HDFC Bank shared its Q2 business update, revealing that its deposit growth had outpaced its loan growth. Gross advances rose by 1.3% to Rs 25.19 lakh crore in the quarter ending September, following a slight decline in the previous quarter. Retail loans increased by Rs 33,800 crore, while commercial and rural banking loans grew by Rs 38,000 crore.
Deposits, on the other hand, grew by 5.1% quarter-on-quarter to Rs 25 lakh crore, reversing the flat growth seen earlier this year. The bank also reported a 2.3% increase in its low-cost CASA deposits.
After its merger with HDFC in July 2023, the bank inherited more loans than deposits, causing its loan-to-deposit ratio (LDR) to spike to 110%. This liquidity challenge led the bank to focus on increasing deposits faster than loan disbursement.
To manage liquidity, HDFC Bank also securitised Rs 19,200 crore in loans during the second quarter, bringing its total securitisation for the year to Rs 24,600 crore.