HDFC Bank hits record high on fund buying

livemint.com:

MUMBAI : HDFC Bank Ltd surged to a record ₹1,757.50 in early trading on Monday, supported by institutional buying following its merger with mortgage lender parent Housing Development Finance Corp. (HDFC) Ltd. But subsequent profit booking by some investors eroded gains.

The stock climbed as much as 3.3% in intraday trading before settling with a modest 1% gain at ₹1,719.8. The market value of HDFC Bank hit a record high of ₹9.62 trillion. The buying was “most likely" led by funds that have HDFC Bank in their portfolios and not HDFC, according to U.R.

Bhat, the director and co-founder of Alphaniti Fintech Pvt. Ltd, which provides fund-based investment advisory services. “As the weight of HDFC Bank increases post the merger, such funds (without HDFC) could have started buying more of the bank," Bhat said.

“The buying was also induced by the overhang of uncertainty surrounding the merger out of the way effective 1 July." Bhat believes that the rally witnessed in the bank “has more legs" but refrained from citing any levels for the stock. Rajesh Palviya, head of research at Axis Securities, said the imminent weighting rise was “spurring" fresh buying among some funds, extending the bank rally to ₹1,840 in the near term. The buying was evident in HDFC Bank’s delivery volume on Monday, totalling 11.5 million, 2.6 times the average daily volume of 4.4 million shares in the past year.