HDFC Bank’s 11 lakh crore question: Can it fix its margins

Market pulse

The week ahead is set to be a busy one for domestic markets, with the derivatives expiry for NSE contracts scheduled for July 28 and BSE contracts on July 30. Investors will also be closely watching the accelerating earnings season, as around 400 companies are expected to report their quarterly results, including heavyweights like Adani Enterprises, L&T, Hindustan Unilever, ITC, and Maruti Suzuki. However, a cautious tone prevails after the Nifty declined below key support levels, with elevated crude oil prices and geopolitical tensions in the Middle East remaining key global concerns.

From the investor's mind

One post worth your time, explained

@iRadhikaGupta · on X

Explaining why a combined REIT and InvIT index fund isn't feasible, Radhika Gupta points out that a REIT is considered an equity instrument, while an InvIT is a hybrid. A fund combining both would therefore become a hybrid index fund. However, hybrid index funds are designed specifically for pure equity and debt components, making such a blended structure incompatible with their regulatory framework. Her clarification highlights the distinct classifications of these investment vehicles and the rules governing the types of assets permitted within different fund categories.

Word in the street

What the wider market is buzzing about

HDFC Bank Limited

₹743Past year ▼ 25%M.cap ₹11,43,986 Cr

Few stocks capture the market’s attention quite like HDFC Bank, especially after a year that saw its shares fall nearly 25 percent. Despite its massive 11,43,986 crore market capitalisation, investor discussions have been intensely focused on its fundamentals following the significant merger with HDFC Ltd. Conversations have revolved around the bank's declining net interest margins, weaker return on equity, and a lower CASA ratio. These discussions question whether the bank's valuation multiple should be lower going forward. Some have drawn comparisons to historical global bank mergers, though others argue the circumstances, like regulatory pressures and the preceding financial crisis in those cases, were entirely different.

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