1, March, 2024
HomeBusinessHDFC Bank Drives $21 Billion Market Value Erosion: Indian Banking Sector Faces Gloomy Outlook

HDFC Bank Drives $21 Billion Market Value Erosion: Indian Banking Sector Faces Gloomy Outlook

Published on

The Indian banking sector, valued at $433 billion, is facing a concerning outlook following a rare selloff in HDFC Bank Ltd., the country’s largest private sector lender.

Read Also | HDFC Life Click 2 Achieve: Your Secure Path to Guaranteed Benefits

A gauge representing the top 12 largest banks in the country witnessed its most substantial weekly decline since January, resulting in a staggering market value reduction of over $21 billion. Notably, two-thirds of this significant loss can be attributed to HDFC Bank, which reported declining net interest margins and weaker deposit growth in its quarterly results.

At the beginning of 2024, India’s banks celebrated their most significant annual gain in US dollar terms in four years, positioning the sector as a top choice alongside tech stocks, as indicated in a recent informal survey by Bloomberg. However, HDFC Bank’s recent earnings report has sparked concerns about the upcoming results from peers ICICI Bank Ltd., Kotak Mahindra Bank Ltd., and Axis Bank Ltd.

Analysts suggest that the era of banks trading at more than three times their price-to-book ratio may be over. Seshadri Sen, a strategist at Emkay Global Financial Services Ltd., notes that most large-cap banks are anticipated to exhibit slower earnings growth in FY25, compared to previous years, potentially impacting their stock performance.

Private sector banks and non-bank lenders could face challenges, particularly if they prioritize market share in loans at the expense of margins amid tight liquidity, warns Goldman Sachs Group Inc. analyst Rahul Jain.

The upcoming quarterly earnings reports from ICICI Bank, Kotak Mahindra, and Axis Bank are anticipated to shed further light on the challenges faced by the banking sector.

Read Also | GTA VI Announcement Expected This Week: What to Know About the Grand Theft Auto Sequel

The dimming prospects for the banking sector are concerning for the broader market, given that the top five private lenders contribute to over a quarter of India’s key NSE Nifty 50 Index. Additionally, banks played a significant role, accounting for 15% of the gauge’s gain last year, according to data compiled by Bloomberg.

Latest articles

WhatsApp Unveils Handy Pop-Out Chat Feature for Windows Beta

WhatsApp is set to revolutionize user experience with the introduction of a new pop-out...

Not-So-Neighborly Hollywood Stars: Tales of Trespassing and Turmoil

Living next to a Hollywood celebrity might sound like a dream, but for some...

Global Recognition: ‘Drishyam’ Franchise Set for Hollywood Remake After Korean Success

The Drishyam franchise, celebrated for its triumph in India and China, is poised for...

More like this

Bumble Initiates Restructuring, Announces Workforce Reduction

Bumble, the popular dating app, has disclosed plans to terminate approximately 30% of its...

Dailyhunt Nearing Acquisition of Indian Social Network Koo

Dailyhunt is reportedly in the final stages of discussions to acquire Koo, a Bengaluru-based...

Expedia Announces 1,500 Jobs Layout Amid Shifting Travel Landscape

Expedia Group is set to trim its global workforce by 9%, amounting to approximately...
Enable Notifications OK