HDFC Bank stock outlook: Here's what the F&O data, technical charts suggest

Despite a near 5 per cent rally in HDFC Bank, the derivatives data shows tepid buildup in open interest; options data indicate strong resistance likely in the Rs 1,820 - Rs 1,835 range this July.

HDFC Bank stock had gained nearly 5 per cent in the last three days and registered a new summit at Rs 1,794 on July 03, 2024. The recent gains at the counter were attributed to hopes that the private sector lender's weight in the MSCI Emerging Market index may double in August 2024.

Further, optimism was also sparked after the foreign portfolio investor (FPI) holdings in HDFC Bank stock slipped below 55 per cent, the threshold set by the global index provider.

The stock, however, was down 1.5 per cent at Rs 1,744 following reports that Mitsubishi UFJ Financial Group Inc.'s negotiations for a minority stake in HDFC Bank's consumer lending unit were stalled due to differences over how much say it will have in company strategy, as per a Bloomberg.

 

Against this background, here's a short-term outlook on HDFC Bank based on the technical analysis and derivatives data.

HDFC Bank stock on the technical charts

HDFC Bank

Current Price: Rs 1,745

Upside Potential: Rs 1,850

Support: Rs 1,700

Resistance: Rs 1,775

Technically, HDFC Bank stock attempted to give a fresh breakout on the daily chart yesterday, but failed as the stock closed at the lows of the day below the higher-end of the Bollinger Bands on the daily chart.

Having said that, the overall bias for the stock remains positive as the stock is firmly trading above its key moving averages across time-frames.

On the weekly scale, the stock has rallied nearly 25 per cent in the last eight weeks, and now trading near over-heated levels. Charts suggests that the bias for the stock is likely to remain bullish as long as the stock holds above Rs 1,700-mark on a weekly closing basis. On the upside, the stock seems headed towards the super trend line resistance on the monthly chart, which exists at Rs 1,850, with interim resistance seen at Rs 1,775.

F&O cues for HDFC Bank in July series

July series PCR: 0.61
Highest OI in Calls: Rs 1,800; Rs 1,820; Rs 1,780
Highest OI in Puts: Rs 1,700; Rs 1,780; Rs 1,750; Rs 1,650
 

Meanwhile, in the derivatives segments, the near 5 per cent rise in HDFC Bank stock seems to be lacking participation from F&O players, as the open interest (OI) has just risen by 1.7 per cent only. 

In comparison, the OI in Nifty July futures has increased by 2.3 per cent and that in Bank Nifty futures by 13.4 per cent in the same period.

The NSE options data shows HDFC Bank July contract PCR (Put Call Ratio) at 0.61; this implies presence of higher OI in Calls against Puts.

The highest OI among Calls is seen at Rs 1,800 Strike Price, with significant addition seen at the same, along with that of Rs 1,780 and Rs 1,820 Strikes. The OI-to-option premium pricing indicates likely stiff resistance for the stock in the Rs 1,820 - Rs 1,835 band for the July series. 

On the other hand, highest OI in July-month Puts is seen at Rs 1,700 and Rs 1,650 Strike prices. Fresh Put writing was visible at Rs 1,780 and Rs 1,750 Strikes. This suggests likely support for the stock around Rs 1,740 - Rs 1,725 levels; trade below the same can see the stock tests Rs 1,700-mark.