HDFC Bank shares in focus after receiving second Sebi warning letter in a week

HDFC Bank shares will remain in focus on Tuesday after the lender received another administrative warning from Sebi for non-compliance with certain regulatory provisions. This is the second such letter from Sebi within a week.

Earlier, Sebi had sent out a warning letter to HDFC Bank over observations made during the course of its periodic inspection of investment banking activities undertaken by the Bank.

This time, the warning letter relates to the resignation of Arvind Kapil, a senior employee at the Bank, where it had disclosed the information to the exchanges with a three-day delay.

Sebi said the Bank has also violated another provision by failing to explain the delay of disclosing the resignation of Kapil.

"The above violation has been viewed seriously. You are therefore warned to be careful in future and advised to exercise due caution in future and avoid recurrence of such instances, failing which appropriate enforcement action may be initiated," Sebi said.

The regulator has also advised the Bank to take corrective steps, to place this communication and the correct steps before the Board and disseminate the same to exchanges.

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Shares of the private lender have seen a strong run in the last six months, rallying 17% and thereby adding about Rs 3 lakh crore to its market cap.

The Bank, which lagged behind its peers post the merger with HDFC, is currently the best performing large private sector bank on account of its relatively better margin, asset quality outcomes amid rising asset quality noises in unsecured loans.

Analysts said that the post-merger balance sheet has become stronger and looks poised for steady growth.

Out of the 40 brokerages with a coverage on the stock, none have a sell rating and a majority of 28 analysts call it a strong buy, according to Trendlyne data.

Market data indicates that FIIs have been buying HDFC Bank even recently. In the second half of November, financial services was on top of the buying list of FIIs which spent Rs 9,597 crore on the sector.

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The recent interest was fueled by extraordinary trading volumes linked to MSCI's November rebalancing, which increased the bank’s index weightage and attracted an estimated $1.88 billion in passive inflows.

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