Friday has also been a bad day for India’s largest private lender HDFC Bank. Last Thursday, after the resignation of the chairman, the bank’s shares went down by 5 percent. At the same time, selling continued even today i.e. on Friday. The bank’s shares fell another 2% on BSE on Friday to reach the day’s lowest level of Rs 781. This shows that despite the huge 5% fall in the stock on Thursday, weakness remains. Thursday’s fall had caused investors to lose nearly Rs 1 lakh crore in a short time. With today’s fall, HDFC Bank’s share price has fallen 7.5% in 2 sessions.
The continuous fall in ADRs reflects the anxiety created among investors after the sudden resignation of former chairman Atanu Chakraborty. Heavy selling was seen in shares on Thursday, due to which the reduction in market capitalization had at one time reached around Rs 1 lakh crore. The reason for this selloff was Chakraborty’s resignation, in which he had said that some incidents and working methods within the bank in the last two years were not in accordance with his personal values and thinking.
The bank’s chief executive and managing director Shashidhar Jagadeesan said the board had asked Chakraborty to rethink his decision and clarify its concerns. He said that every member of the board tried to persuade him to withdraw his resignation or provide more information, but he did not do so. HDFC Bank acted swiftly and appointed former HDFC CEO Keki Mistry as interim part-time chairman with the approval of the Reserve Bank of India. After this development, the bank organized a conference call.
What is the expert’s opinion?
Despite the strong reaction in the market, analysts have started seeing this decline as a possible opportunity instead of considering it as a sign of any major problem. Deven Choksi said that this decline has taken the stock to deep value i.e. cheap level, although he also admitted that due to recent developments the price may now include some discount.
In an ET report, Ishan Tanna of Ashika Capital said that this situation seems to be more of a technical rather than a fundamental problem. He described the resignation of the chairman as an opportunity to buy on dips and also said that the bank’s strong systems and long experience provide confidence to investors. Tanna also pointed to the management’s statement that this matter is not a matter of concern over any rule or law, but of differences in thinking and way of working.
Also read- Common man got electrocuted by currency! Dollar crosses 93; Everything from petrol-diesel to electronics will become expensive.