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Shares of HDFC Bank Ltd underperformed benchmark indices in 2020 for the first time in seven years as the pandemic deepened wider investor concerns over the asset quality of banks.

Shares of India’s largest private lender gained 11.1% so far this year in its worst performance since 2013, according to Bloomberg data. In comparison, the Sensex and Nifty rose 14.8% and 14%, respectively.

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To be sure, the Nifty Bank index, Nifty Private Bank index and Bankex index have fallen 5.5%, 5.6% and 4.8% year to date, respectively. Interestingly, only a handful of stocks in the banking sector are set to see off the year with gains. Except for HDFC Bank, Kotak Mahindra Bank (up 16%) and Bank of Maharashtra (up 3%), all stocks in the BSE Bankex are set to end 2020 with losses.

Subdued year
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Subdued year

So far this year, IndusInd Bank is down 44%, RBL Bank shed 35%, Bandhan Bank declined by 22%, State Bank of India and Axis Bank have lost 20% each while ICICI Bank has lost 5%.

“2020 has been a roller coaster for financial stocks. The year started off with investors’ optimism on growth and asset quality, but these got punctured by covid, and towards the end saw such concerns dissipating. The stocks behaved in a similar fashion, but interestingly, some large private banks and NBFCs/HFCs with resilient business models have either surpassed or are trading near their pre-covid price levels. The likes of HDFC Bank, Kotak Mahindra Bank led the recovery in financial stocks," said Rajiv Mehta, lead analyst-institutional equities, Yes Securities.

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