BackWhy HDFC twins are under sell off heat — explained
HDFC twins share prices fell on Friday despite strong Q4 results as MSCI has announced to use an adjustment factor of 0.50 for computing the weight of merged entity of HDFC Bank and HDFC Ltd
PremiumStock market today: After MSCI's announcement to use an adjustment factor of 0.50 for computing the weight of the merged entity of HDFC Bank and HDFC Ltd, HDFC twins came under sell-off stress since early morning deals on Friday and continue to bleed throughout the weekend session.
HDFC Bank's share price lost to the tune of 6 per cent and finished at ₹1,626.95 apiece levels on NSE. Similarly, HDFC Ltd share price closed with a loss of 5.56 per cent at ₹2,702.90 per share on NSE.
According to stock market experts, HDFC twins share price fell on Friday session due to MSCI's announcement to use an adjustment factor of 0.50 for computing the weight of merger entity of HDFC and HDFC Bank. However, they maintained that it's short term sentiment, which won't last for long. They advised long term investors to take advantage of this fall as both stocks are expected to bounce back strongly in near term.
Why HDFC twins are falling despite strong Q4 numbers
Speaking on the reason for fall in HDFC shares and HDFC Bank share price, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “MSCI has announced that they will use an adjustment factor of 0.50 for computing weight of merged entity of HDFC Bank and HDFC. This will lead to erode $150 million market weight of HDFC Bank and hence Dalal Street has gone negative on the HDFC twins."
However, Avinash Gorakshkar maintained that both the stock would bounce back strongly as fundamentals of both entities are healthy and they have recently reported strong Q4 numbers. So, this dip should be taken as an opportunity by bargain hunters as both the stocks are very strong portfolio stocks for a long term investor.
Outlook for positional investors
Echoing with Avinash Gorakshkar's views, Sumeet Bagadia, Executive Director at Choice Broking said, “One should maintain buy on dips strategy in both scripts. HDFC shares can be bought at current market price for the target of ₹2,850 apiece levels. However, one must maintain stop loss at ₹2,650 per share levels."
Sumeet Bagadia of Choice Broking said that HDFC Bank share price has strong support placed at ₹1,600 whereas it is facing resistance at ₹1,750 apiece levels.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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