HDB Financial Services’ IPO marked a notable event, raising ₹12,500 crore and listing at a 13% premium, with shares quickly gaining an additional 20%. The strong oversubscription—especially from institutional investors—signals continued demand for large, bank-backed NBFCs. HDFC Bank’s sale of a stake in HDB provides a significant capital buffer, with proceeds of around ₹9,373 crore and its stake reduced to 74.19%.

Q1 FY26 results across the Indian banking sector show broad-based strength, with HDFC Bank’s deposit growth (16.2% YoY) notably outpacing advances. Small finance and private sector banks also reported robust growth in both deposits and loans, indicating healthy underlying credit demand.

Despite these positive fundamentals, HDFC Bank and ICICI Bank led a sharp decline in market capitalization last week, as foreign investors pulled back and risk sentiment weakened ahead of the earnings season and global macro events. The Sensex fell 0.74%, with financials underperforming even as Reliance and Infosys posted gains.

The RBI’s recent 50 bps repo rate cut has prompted major banks to lower deposit and lending rates. While this should support credit growth and potentially boost treasury gains, it may add pressure to net interest margins. Revised FD rates, especially for senior citizens, are now a key competitive tool, with Indian Bank offering up to 7.65% and HDFC Bank up to 7.10%.

Legal risk remains a near-term overhang for HDFC Bank, as its CEO faces ongoing fraud allegations related to the Lilavati Trust. The Supreme Court’s decision on the matter is pending. Traders should monitor further legal developments, Q1 earnings releases, and foreign flow trends for direction in the sector.