HDFC Bank shares see biggest intraday jump in 4 months; should you buy, sell or hold?

New business data points to the fact that HDFC Bank shares rose as much as 3.2 percent on Tuesday, marking their biggest percentage gain in more than four months, after the country's largest private sector lender advanced its CEO succession process by submitting two names to the Reserve Bank of India (RBI).

The bank shared the update on Saturday without disclosing the name of the candidates. The bank is looking to replace CEO Sashidhar Jagdishan, whose term ends in October.

HDFC Bank shares, which were around 40 percent foreign-owned at the end of June, have fallen 27.2 percent so far this year.

That stated, despite the sharp decline this year, many research firms remained positive on HDFC Bank.

Macquarie stated HDFC Bank had taken a decisive step towards settling its closely watched governance offering, with the board approving and forwarding two candidates to the RBI for appointment as CEO for a three-year term.

It set a target price of Rs Rs 1,150 for the shares of the firm, an upside potentail of more than 62 percent.

Moneycontrol noted Kaizad Bharucha, the bank's current Deputy Managing Director, as an internal contender. That stated, under prevailing norms, he would be unable to serve the full term, Macquarie stated.

The bank has additionally strengthened its executive ranks by reappointing V Srinivasa Rangan as a Whole-time Director, designated Executive Director, for one year from November 2026. It has additionally appointed Jimmy Tata as a Whole-time Director, designated Executive Director, for three years, effective from RBI approval.

An external appointment to the MD and CEO position, bringing a fresh perspective and a clean mandate, could catalyse a re-rating of the stock, Macquarie further noted.

On the technical front, market watchers advised caution despite Tuesday's sharp rebound.

Virat Jagad, Senior Technical Research Market observer at Bonanza, stated, "HDFC Bank stays in a broader downtrend, trading below the major EMAs despite the recent bounce from Rs 683 backing. RSI has improved, but trend confirmation is still absent."

"Avoid fresh buying. Existing positions can hold with Rs 683 as the key SL; breakdown below Rs 683 may lead to Rs 660-636," he further noted.

Jefferies additionally retained its positive view, saying the board had moved quickly on several aspects of the succession process.

Jefferies gave a target price Rs 880, saying the board moved quickly to seek RBI approval on four aspects — the appointment of a new CEO for three years, for which it has submitted two names, likely one internal and one external; an additional one-year term for Rangan as Executive Director; the appointment of Jimmy Tata, Chief Compliance Officer, as Executive Director for three years; and the introduction of a fourth Executive Director role for better oversight and succession planning.

The new CEO would be involved in the choice of the fourth Executive Director, it stated.

Clarity on a smooth succession would be positive for the bank and the sector, Jefferies stated.

Nomura stated an internal appointment could provide initial relief, while a credible external candidate could have a bigger impact on the stock over the medium term.

It set a target price Rs 950 for the stock.

The brokerage stated an internal appointment could provide initial relief by ensuring continuity and limiting disruption. Kaizad's familiarity with the bank and its businesses could additionally allow for a smoother transition, it stated.

That stated, a credible external candidate could offer a longer runway and a cleaner slate, Nomura stated.

"This could be more significant for stock over medium term, as a new leader would have greater scope to reassess strategy, challenge existing practices and drive a strategic reset," the brokerage stated.

With the stock having materially underperformed, a credible external appointment with a firm operating track record could emerge as a catalyst for a re-rating, particularly if accompanied by a clear roadmap on expansion, deposits, margins and returns, Nomura stated.