Stock in focus next week: HDFC Bank

The company would be in focus on Monday as it is set to declare its Q4FY22 results on Saturday.

HDFC Bank Limited is a banking giant that offers a range of services covering commercial, retail, and investment banking to corporates as well as general public. With a market capitalization of Rs 8,12,000 crore, it is the largest banking company in India. The lender has strong financials and has been the backbone of the Indian banking industry. The company would be in focus on Monday as it is set to declare its Q4FY22 results on Saturday.

The company is expected to report an 18% increase in its net profits, while Net Interest Income is expected to increase by 13% YoY. Focus will be on the management commentary for the financial year 2022-23 and would also be on inflation and growth projection, as well as recent development regarding the merger news with Housing Development Finance Corporation (HDFC).

The stock of HDFC performed extremely weak last week. It was dominated by profit booking by the investors ahead of the results while its recent run-up on the news of merger also proved to be a good exit door for many foreign investors. The stock plunged about 3.28% during the week and closed at a day’s low. On the technical chart, the stock formed a strong bearish candle and closed below its 20-week MA. Moreover, the stock trades below all of its key short term and long term moving averages.

The technical indicators also indicate bearishness, as the 14-period daily RSI has fallen below 50 and points downward. Meanwhile, the MACD has signalled a bearish crossover while OBV has also shown weakness. Overall, the price structure and technical indicators indicate extreme weakness in the stock.

However, the corporate result can turnaround the things. A better-than-expected result can induce a huge short-covering rally which can propel the stock higher. Regardless of the result, the stock is expected to remain volatile on Monday and is the stock to focus on.