Shares of Housing Development Finance Corporation (HDFC) fell about 3 percent on Friday amid the overall weakness in the global markets. HDFC raising its Retail Prime Lending Rate (RPLR), or the rate at which housing financers lend to most creditworthy customers, by 50 basis points is also said to have triggered selling in the stock.
At 10:54 IST, shares of HDFC were down 3 percent at Rs 2,197.4 on the BSE. The stock has fallen after two days of consecutive gain.
Share price performance of HDFCInvestors are watchful of the inflation data as it provides cues about the future course of action by central banks.
"The overall sentiment in the market is weak, and investors are looking forward to the US consumer price index (CPI) data, which is due later on Friday and is expected to show prices remained elevated in May," said Purvesh Shelatkar, head of institutional broking, Monarch Networth Capital.
Shelatkar said this overall nervousness for rate-sensitive stocks in the market, along with a built-up of short positions in HDFC, has put pressure on the stock.
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The upward revision in RPLR, on which its adjustable rate home loans (ARHL) are benchmarked, is reflective of the financial services company passing on the interest rate hike to customers.
"While the hike in RPLR should help support HDFC's net interest margin (NIM), the lender's credit growth will be monitorable as the demand in some housing segments is sensitive to interest rate increases," said Rati Pandit, senior research analyst, Quantum Securities.
Considering that demand in affordable and prime segments is the strongest in a decade, a 50-100bps rise in lending rates should not have much impact on credit growth in the home loan segment for all top lenders, including HDFC, Pandit said.
How smoothly the reverse merger with HDFC Bank takes place is another factor to look at, Pandit added.
India's largest private sector lender, HDFC Bank, has reportedly requested its parent HDFC to reduce exposure to a certain category of loans that the RBI doesn't allow for banks. As per some reports, these are mostly short-term loans that include certain corporate loans and loans to developers. It is estimated that the current value of these loans on HDFC's books is around Rs 20,000-25,000 crore.
This news is also likely to have led investors to sell shares of HDFC on Friday.
Many lenders have hiked loan rates after RBI Governor Shaktikanta Das announced the unanimous decision of the Monetary Policy Committee (MPC) to hike the repo rate — the key interest rate at which the central bank lends money to banks — by 50 basis points to 4.9 percent.
Global central banks are faced with the tall task of taming inflation without slowing economic growth.
First Published: Jun 10, 2022 1:03 PM IST
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