HDFC, HDFC Bank share prices jump over 1% as RBI approves merger proposal; should you buy, sell, hold?

Housing Development Finance Corporation (HDFC) share price jumped 1.4 per cent to Rs 2,246.35 apiece; and HDFC Bank stock price rose nearly 1 per cent to Rs 1,368

HDFC, HDFC Bank, merger
HDFC-HDFC Bank merger would be the largest in Indian corporate history

Housing Development Finance Corporation (HDFC) share price jumped 1.4 per cent to Rs 2,246.35 apiece; and HDFC Bank stock price rose nearly 1 per cent to Rs 1,368 apiece on Tuesday. These gains in stock prices came after HDFC Bank on Monday said the Reserve Bank of India (RBI) has approved its amalgamation with Housing Development Finance Corporation (HDFC). The merger would be the largest in Indian corporate history, creating a financial behemoth with a $169-billion market capitalisation and will be among the 10 most valued banks in the world.

Technical analyst says that both the stocks on the charts looks bottomed out; they have seen taking multiple supports on a pattern resistance. “Both HDFC and HDFC Bank are inside the leading quadrant of the RRG when benchmarked against the broader Nifty 500 index,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told FinancialExpress.com.

Apart from this, Vaishnav also added that Nifty Bank index is inside the leading quadrant while Nifty Financial Services index is inside the improving quadrant of the RRG. “These two sector indices were seen improving their relative strength and momentum and these two stocks are bound to perform as they enjoy major weights in both the indexes. Investors can buy these two stocks using the most recent low as a protective stop,” he advised.

HDFC-HDFC Bank merged entity will be twice the size of ICICI Bank, the second largest private bank in the country, and will shrink the gap between HDFC Bank and State Bank of India (SBI). Despite the RBI approval of the HDFC Bank an, HDFC Ltd merger, investors haven’t reacted in a very positive way as this news has already been factored earlier, AR Ramachandran, Co-founder & Trainer, Tips2Trades, told FinancialExpress.com.

Ramachandran added that Q1FY23 estimates, though consistent, have failed to have a positive impact on the stock. “Technically, HDFC Bank needs to close above 1380 on daily basis to move up to 1435-1480 in the coming days. Strong support will be at 1325,” he said.

Ravi Singh, VP & Head of Research, Share India Securities, told FinancialExpress.com that HDFC Bank and HDFC were showing bullish trend on major momentum indicators like RSI, MACD, Williams and 200 DMA. “The surge in volume and consolidation near resistance levels were confirming the bullish momentum. The stocks may touch the levels of 1450 and 2300 respectively in near term,” Singh said.

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