Despite low valuations, HDFC Bank stock still not a buy: Coheron Wealth's Aditya Agarwal

Shares of HDFC Bank may be trading at what market participants describe as unusually cheap valuations, but that alone is not enough to justify an aggressive entry, according to Aditya Agarwal, Head of Investment at Coherent Wealth. His message to investors is clear: the stock may be in pain, but the technical setup still argues for patience.

In a market grappling with profit-booking and fading momentum in large-cap names, Agarwal said HDFC Bank is unlikely to lead the next leg of the banking rally. “Not at current levels,” he said when asked whether the stock had become an entry opportunity, adding that “structure-wise, it is looking weak.”

Valuation comfort, but no technical trigger

The caution is notable because HDFC Bank has slipped to valuation levels that many investors would typically consider attractive. Yet Agarwal’s view suggests that cheapness without price strength can become a value trap in the short term, especially when private banks are already struggling to regain leadership within the broader market.

His assessment is that HDFC Bank will likely remain “a market performer” rather than an outperformer. That distinction matters in the current tape, where investors are rotating selectively and rewarding pockets of momentum rather than simply buying quality at lower multiples.

Why the stock may stay under pressure

Agarwal expects “some dip of consolidation” in HDFC Bank over the next few weeks, and possibly even over the next month. In practical terms, that means the stock could drift lower before a stronger risk-reward setup emerges.

He pegged the more attractive buying zone at Rs 670-680, implying another 7-8% downside from the levels being discussed in the segment. “That’s the good level to go aggressively long in HDFC Bank,” he said, while stopping short of recommending a full-scale entry immediately.

Private banks lag as PSU lenders show strength

The broader backdrop also explains the caution. Agarwal said Bank Nifty itself is not looking particularly bullish, with PSU banks showing relative strength while private lenders remain under pressure. He flagged weakness not just in HDFC Bank, but also corrections in Axis Bank and signs of profit-booking in ICICI Bank.

That suggests HDFC Bank’s struggle is not merely stock-specific; it reflects a wider divergence within the banking pack. As traders chase stronger themes in power, autos and select mid-caps, private banks may continue to consolidate rather than deliver sharp upside.

What investors should do now

For investors keen to build exposure, Agarwal’s strategy is measured accumulation rather than urgency. He advised “scatter buying” on declines toward the Rs 650-670 band, effectively recommending staggered purchases instead of chasing the stock at current levels.

The takeaway is straightforward: HDFC Bank may be getting cheaper, but for now, the market is still asking investors to wait for a better entry point.