Indian stock market: Why you should have SBI, HDFC Bank shares in your stock portfolio?

Indian stock market: After rising for five straight sessions, Indian stock market is under pressure in the early morning session on Tuesday as Asian stocks find little cheer from China’s interest rate cut. However, despite a strong rally on Dalal Street, some quality stocks remained almost non-participant and they are still available at a discounted price. Shares of HDFC Bank and State Bank of India (SBI) are one of them.

While the SBI share price seems bottomed out at the end of January 2024 at around ₹605 apiece levels and the banking stock has risen around 25 percent since then HDFC Bank share price has given zero return in YTD. HDFC Bank share price has dipped over 15 percent in YTD time.

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According to stock market experts, the SBI share price has bottomed out and is ready for a big upside move as we have witnessed in the majority of the banking stocks in the last few years whereas HDFC Bank share price has limited downside possibility. They said that in the current bull trend on Dalal Street, shares of SBI and HDFC Bank qualify for an addition to one’s stock portfolio for the medium to long term.

Why does your stock portfolio need a rejig?

Pressing for a rejig in one’s stock portfolio, Shreyansh V Shah, Research Analyst at StoxBox said, “After almost a decade, the valuation of PSBs is showing promising signs, however, still far from the rich valuations of their private counterparts. Factors such as a healthy balance sheet, robust credit growth, strong margins, and decadal low NPAs with strong capital adequacy have helped PSBs to post stellar performance in 2023 and is expected to continue in the medium term.”

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The StoxBox experts said that one can look at adding SBI and HDFC Bank shares to one’s stock portfolio as these stocks are available at a discounted price and possess huge upside potential.

SBI share price outlook

On why one should add SBI shares to one’s stock portfolio, Shreyansh V Shah said, “We believe that SBI should be added to the portfolio as we do not see any challenge in credit costs in 2024 due to its balanced loan portfolio and expect credit costs and asset quality to remain stable in 2024. Also, with healthy capital adequacy, we do not foresee any need for the bank to raise further capital to comply with the RBI’s circular on risk-weighted assets. SBI currently trades at 1.7x FY25E book value, still far from the rich valuations of its private counterparts.”

Speaking on the SBI share price technical outlook, Shiju Koothupalakkal, Technical Analyst at Prabhudas Lilladher said, “SBI share price has witnessed a strong run-up recently hitting the All-Time High level of ₹774 zone and with the trend going strong, further rise is anticipated. Currently, finding resistance near ₹770 to ₹775 zone it has halted the rally, and with most of the indicators hovering near the highly overbought zone, the chances of some profit booking cannot be ruled out. From current levels, the near-term support is at around ₹724 to ₹730 zone of the long-term trendline zone and can be the appropriate level for re-entry in the stock.”

HDFC Bank share price outlook

On why one should add HDFC Bank shares in one’s portfolio, Shreyansh V Shah of StoxBox said, “We believe that HDFC Bank should also be added to the portfolio as we believe that margins have likely bottomed out in Q3FY24 and is expected to improve from hereon. Stock is trading at only 15x FY25E earnings and 2.3x FY25E book value of ₹700 per share. In the last five years, earnings have grown at 17% CAGR, while market cap growth is only 9%. Thus, we expect the stock to perform well in the long term.”

On the outlook of HDFC Bank shares, Shiju Koothupalakkal of Prabhudas Lilladher said, “The stock after peaking out near ₹1721 zone has tanked heavily, post the result outcome which did not match the expectations and with profit booking witnessed has slipped down to hit the 52-week low of ₹1363 levels. Currently, with a weak bias maintained, the stock needs to breach above the ₹1450 to ₹1460 zone to improve the bias and thereafter, expect for further rise in the coming days.”

Shiju Koothupalakkal of Prabhudas Lilladher went on to add that the support for HDFC Bank share price as of now would be maintained near ₹1360 zone while the upside target from current levels would be ₹1460 and thereafter, ₹1530 levels of the important 100 period MA zone.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.