HDFC Bank down 4% in 2 days, falls below 200-DMA: analysts decode strategy

HDFC Bank shares slide 4% in two days and fall below the 200-DMA. Analysts explain FII selling, Q3FY26 update impact and strategy ahead.

A sharp decline in HDFC Bank shares has weighed on the markets over the past two days. On Tuesday, HDFC Bank share price declined 1.6 per cent, taking its two-day slide to 3.9 per cent on the BSE. From its record high level of ₹1,020 (touched on October 23, 2025), the stock has slipped 5.7 per cent.

 

By comparison, the BSE Sensex index has eased 0.8 per cent in two days.With Tuesday’s fall, HDFC Bank stock has dipped below its long-term 200-day moving average (200-DMA) of ₹965 for the first time in nearly 10 months (since March 11, 2025). 200-DMA is considered as a key long-term indicator, with stocks trading above the same enjoying bullish (positive) sentiment and vice versa.

 

 

Decoding the fall

 

Fundamentally, analysts believe profit booking by foreign investors, and panic selling by domestic investors, following the lender’s third quarter (Q3FY26) business update, have been weighing on the stock.

 

“Investors have rushed to sell HDFC Bank shares post its Q3 business update. Though, to my mind, the numbers are not problematic. The loan and deposit growth has been decent for a giant like HDFC. What is weighing on the stock is huge selling by foreign portfolio and institutional investors (FIIs/FPIs), who have a significant shareholding in the bank,” said Kranthi Bathini, director-equities, WealthMills Securities.

 

The country’s largest private sector lender’s loan book recorded a growth of 11.9 per cent year-on-year (Y-o-Y), to ₹28.44 trillion, during the October-December quarter (Q3FY26).

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HDFC Bank’s deposit base, meanwhile, rose by 11.5 per cent Y-o-Y to ₹28.59 trillion in Q3.

 

Accordingly, the bank’s credit-to-deposit (CD) ratio inched up to 98.5 per cent at the end of Q3FY26 versus 98 per cent in Q2FY26 and 95 per cent in Q1FY26.

 

A higher CDR, typically, restrains a bank’s ability to extend loans, curtailing its growth. This concern has surfaced at a time when the management aims to outpace systemic credit growth by the next financial year (FY27).

 

Bathini, however, noted that a CDR of 99 per cent is "not a big concern" for HDFC Bank.

 

“Investors should avoid panic selling in HDFC Bank as the lender enjoys a strong balance sheet. Besides, we are entering a phase of credit uptick. Banks like HDFC will, eventually, enjoy the benefits of an easing monetary policy cycle,” he said.

 

Global brokerage Macquarie, too, noted that CDRs have shot up across the board in Q3FY26, taking the metric to an all-time high of over 81 per cent.

 

Contained CDR aspirations, Macquarie said, will have to take a back seat if loan growth is seen as a priority.

 

Investment strategy

 

Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, suggests investors may gradually accumulate the stock on dips as the lender may continue to underperform the market as long as FPIs/FIIs remain net sellers of Indian equities.

 

FPIs have already sold Indian equities worth ₹6,224 crore in January 2026, after offloading a record ₹1.7 trillion in calendar year 2025. They held around 48.37 per cent stake in HDFC Bank at the end of September quarter (Q2FY26).

 

Given a decent Q3 business update, investors may hold or buy the stock on dips Bathini advised.

 

According to technical charts, the stock has also slipped below its 20-DMA, 50-DMA and 100-DMA, which stand at ₹990, ₹994 and ₹983, respectively.

 

“The 20-, 50- and 100-DMAs are clustered in the ₹985 - ₹990 zone and are acting as a strong overhead resistance, indicating supply at higher levels,” said Aakash Shah, technical research analyst at Choice Equity Broking.

 

As long as the stock trades below ₹980 - ₹990, the technical view remains cautious, and a sustained move above this resistance zone would be required to improve the overall structure.

 

A breakdown below ₹950, Shah cautioned, could expose the stock to further downside towards ₹930 - ₹920 levels.