HDFC Bank shares extended their losing streak for a third consecutive session on Wednesday, January 7, declining nearly 2% to ₹946.65 amid continued investor concerns over the bank's elevated loan-to-deposit ratio. The stock has now fallen 5.5% over the last three sessions, remaining among the top three losers on the Nifty Bank index.

Major Block Deal Adds Pressure

The latest decline was accompanied by significant institutional activity, with a large block deal involving 1.84 crore shares of HDFC Bank executed during the session. The transaction details highlight the scale of institutional repositioning in the stock.

Overall activity in the stock remained heavy, with shares worth more than ₹3,750 crore changing hands during the session. Over 85% of this volume has been marked for delivery, indicating long-term positioning by investors.

Loan-to-Deposit Ratio Concerns Drive Selloff

The recent decline in HDFC Bank shares is largely driven by investor concerns around the bank's loan-to-deposit ratio following its December quarter business update. With the latest numbers, the LDR has increased by around 50 basis points quarter-on-quarter to nearly 99%, even as loan growth returned to double digits for the first time since the 2023 merger.

Strong Q3 Operational Metrics Overshadowed

Despite the market weakness, India's largest private sector lender demonstrated robust growth across key business indicators for the quarter ended December. The bank's operational update revealed sustained momentum in both lending and deposit mobilization activities.

The bank's gross advances surged 11.9% year-on-year to ₹28.4 lakh crore, signaling sustained credit demand across various segments. On the deposit front, HDFC Bank maintained strong momentum with average deposits growing 12.2% year-on-year to ₹27.5 lakh crore.

Market Outlook and Growth Constraints

The elevated LDR has raised concerns that the bank's ability to accelerate loan growth remains constrained unless deposit mobilisation improves materially. This has kept investors cautious, especially when compared with peers that currently have more comfortable deposit positions. While management has reiterated its intention to bring the LDR down to below 90% in the near term, the market appears to be factoring in that balance sheet normalisation after the HDFC Ltd merger will take time. Until deposit growth picks up meaningfully, concerns around growth visibility and margin trajectory are likely to persist.

HDFC Bank witnessed significant institutional trading activity with a major block trade executed on the National Stock Exchange (NSE). The transaction involved a substantial volume of shares, highlighting continued investor interest in the banking sector.

Block Trade Details

The block trade executed on NSE involved specific parameters that demonstrate the scale of institutional activity:

Understanding Block Trades

Block trades represent large-scale transactions typically conducted between institutional investors. These trades are executed outside the regular market mechanism to prevent significant price impact that could result from placing such substantial orders through normal trading channels. The execution of block trades often indicates:

• Institutional portfolio rebalancing
• Large-scale investment decisions by mutual funds or foreign institutional investors
• Strategic stake changes by major shareholders

Market Implications

The block trade at ₹950.00 per share reflects the current market valuation for HDFC Bank shares. Such transactions provide insights into institutional sentiment and trading patterns in the banking sector. The substantial value of ₹34.37 crores demonstrates the continued liquidity and investor interest in large-cap banking stocks.

Block trades are significant market events as they involve substantial capital deployment and often reflect strategic investment decisions by large institutional players in the Indian financial markets.