A Case Analysis of HDFC Bank's Share Price Correction: Fundamental Weakness or Market Sentiment

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@article{1720150,
      author = {Savita Gunjal, Dr. Vijay K S},
      title = {A Case Analysis of HDFC Bank's Share Price Correction: Fundamental Weakness or Market Sentiment},
      journal = {Iconic Research And Engineering Journals},
      year = {2026},
      volume = {10},
      number = {1},
      pages = {3430-3437},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1720150.pdf},
      abstract = {This paper investigates the recent correction observed in the market price of HDFC Bank shares, with a view to establishing whether the decline is better explained by deterioration in the bank's underlying fundamentals or by shifts in investor sentiment surrounding specific corporate and regulatory events. Drawing on secondary data from HDFC Bank's annual reports, NSE price records, and RBI notifications, the study computes standard profitability and growth ratios — Return on Assets, Return on Equity, Net Profit Margin, Earnings Per Share, Loan Growth and Net Interest Margin — for the period FY2020 to FY2024, and combines this with an event-study analysis of six identified events between December 2021 and March 2026. Abnormal and cumulative average abnormal returns are computed using a mean-adjusted return model over a thirty-one-day event window. The results show that HDFC Bank's core financial indicators remained healthy and broadly improving over the study period, while short-term price movements around specific events were more strongly associated with investor perception than with any deterioration in fundamentals. Cumulative abnormal returns are found to correlate strongly with Return on Equity (r = 0.85) and Return on Assets (r = 0.77), but only weakly with Earnings Per Share (r = 0.04). The study concludes that the price correction reflects a combination of both forces, with sentiment dominating in the short run and fundamentals reasserting themselves over the longer term.},
      keywords = {HDFC Bank, Share Price Correction, Financial Fundamentals, Market Sentiment, Event Study, Abnormal Returns, Banking Sector, India.},
      month = {July},
      doi = {https://doi.org/10.64388/IREV10I1-1720150}
  }