Will HDFC Bank's Share Price Bounce Back On Friday? Here's What U.S. ADRs Indicate

HDFC Bank’s shares are likely to gain on Friday after the lender’s U.S. depository shares showed signs of a recovery after nosediving around 15% in two straight sessions.

The company’s Indian shares continued their decline on Thursday, slipping over 3% after the lender’s third-quarter results disappointed investors.

What Happened: HDFC Bank’s American depositary receipt (ADR) shares were trading around 1.69% higher during U.S. trading hours. This could translate into an uptick of around 5% in its Indian shares when the market opens on Friday, as each of its American Depository Shares is backed by three of the lender’s Indian shares.

On Wednesday, HDFC Bank shares plummeted more than 8% to close at ₹1,536 after disappointing December quarter results. This marked the biggest single-day decline in over three years, making HDFC Bank the major drag on the benchmark Nifty 50 index, where it holds a weightage of over 14%.

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Key Miss: The weakness in HDFC Bank shares impacted other banking stocks, particularly private sector lenders, resulting in a 4% decline in the Bank Nifty index.

The troubles for the country’s largest private lender arose after it missed estimates for net interest margins, a key banking metric, in Q3 due to higher costs of funds. Additionally, higher provisions and decade-low earnings per share growth in Q3 contributed to the decline.

In Q3, the private sector lender’s NIMs remained flat quarter-on-quarter at 3.6%, while provisions increased by 39% sequentially. Other notable figures for the quarter include a 4% increase in net interest income (NII) and a moderate 2.5% uptick in net profit.

Price Action: HDFC Bank’s share price was down 2.27% at ₹1,502.60 in early trade on Thursday.

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