Mumbai: Bearish bets on stock futures of HDFC Bank, India’s most valuable lender, are at an all-time high as concerns that the company’s profitability is under pressure are seen weighing on its share price.
Total open interest, or outstanding positions, in HDFC’s stock futures rose 115% to 4.19 lakh contracts – a record growth – after its third-quarter results, with most of them being short positions, said Ruchit Jain, chief research analyst at. 5Paisa.com.
The stock fell 0.7% to close at ₹1,384.9 on Wednesday, its lowest level in the last 52 weeks. Since the announcement of the December results on January 16, the share price has fallen over 21.3% against the 4.82% fall in the Bank Nifty index.
“We see the HDFC Bank stock under pressure due to net interest margins (NIM) declining further in the third quarter, along with a shift from CASA (Current Account, Savings Account) to terminal deposits, which is impacting the cost of funds and margins of the bank,” said Shrikant Chouhan, head of equity research at Kotak Securities.
In the options segment, HDFC Bank call and put contracts saw the highest rally at 1,400 strike.
Analysts said election data suggests HDFC Bank could face a strong hurdle at ₹1,440 level.
“1440 is the maximum pain area based on Call-Put data, which if crossed will lead to short covering of positions,” said Rajesh Palviya, head of technical and derivatives at Axis Securities.
Palviya said the level is unlikely to be broken anytime soon, given the weak outlook for the bank, which has resulted in significant fund selling.
Jain said if the stock crosses the ₹1,400 level, it could lead to short covering, which may lead to a rebound in the stock. This could also push the Bank Nifty index, in which HDFC has the highest weightage.