HDFC Bank shares down 30% in 2026: FPI love for India’s largest bank wanes; what’s ahead?

HDFC Bank Ltd, India's largest private sector lender, is facing strong selling pressure in 2026, with its stock falling nearly 30 per cent so far this year. The stock declined another 2.4 per cent to Rs 689.40 during Thursday's session, taking its market capitalisation below Rs 10.70 lakh crore.

Shares of HDFC Bank have fallen 29.95 per cent from around Rs 1,000 at the beginning of the year. The stock is hovering near its 52-week low of Rs 682, recorded on September 11, 2026. Over the past month, HDFC Bank shares have declined around 7 per cent, while they are down 15 per cent over the past six months.

Amid the latest sell-off, an internal probe at HDFC Bank found that two senior executives had disclosed confidential information, Bloomberg reported. The information reportedly related to confidential business strategies and potentially market-sensitive matters. HDFC Bank has not commented on the report.

Foreign institutional investors (FIIs) have also reduced their exposure to HDFC Bank. Their shareholding fell to 39.4 per cent as of September 30, 2026, from 48.4 per cent a year earlier, a decline of 9 percentage points. Meanwhile, domestic mutual funds increased their stake to 31.9 per cent from 26 per cent over the same period.

According to market experts, the stock's weakness is primarily driven by continued margin pressure, earnings growth that has fallen short of expectations following the bank's Q2 FY27 results, and lingering structural challenges arising from its 2023 merger with HDFC Ltd. Leadership and governance-related concerns have also weighed on sentiment. HDFC Bank recently appointed Anup Bagchi as its new CEO.

HDFC Bank reported a 5.6 per cent year-on-year increase in consolidated net profit to Rs 20,700 crore for the September 2026 quarter. Net interest income (NII) rose 9.7 per cent year-on-year to Rs 34,619 crore. However, net interest margin (NIM) contracted to 3.16 per cent, while gross advances stood at Rs 32.2 lakh crore.

Despite the stock's decline, brokerage sentiment remains largely positive. According to consensus ratings from 50 brokerage firms, 48 have a 'Buy' rating on HDFC Bank, while two have assigned a 'Hold' rating. None has a 'Sell' rating.

BNP Paribas has the highest target price among the brokerages cited, at Rs 1,270, implying an upside of around 85 per cent from Thursday's intraday low. InCred Research has an 'Add' rating on the stock with a target price of Rs 1,178, while Bernstein has an 'Outperform' rating with a target price of Rs 1,150.

YES Securities has a 'Buy' rating with a target price of Rs 1,075, while Kotak Institutional Equities and Emkay Global have 'Buy' ratings with target prices of Rs 1,050 each. CLSA has a target price of Rs 1,050 and an 'Accumulate' rating on the stock.