HDFC Bank ADRs tumbled a further 4% after sharp selling, signaling further losses on Friday

HDFC Bank’s American Depository Receipts (ADRs) fell another 4% on the New York Stock Exchange (NYSE), marking the extension of losses after a sharp correction in the stock on Thursday that saw it fall by around 5% and investor wealth by around Rs. 1 lakh crore was briefly eroded. The continued weakness in ADR reflects lingering investor concerns following the sudden resignation of former chairman Atanu Chakraborty, even as the bank’s management and board tried to play down the development.

On Thursday, the stock saw heavy selling pressure, with a market cap erosion of around Rs. 1 lakh crore was touched. The sale was triggered after Chakraborty resigned, citing “incidents and practices” at the bank over the past two years that were not in line with his personal values ​​and ethics. However, the absence of specific details has added to the uncertainty.

HDFC Bank chief executive and managing director Sashidhar Jagadeesan said the board had requested Chakraborty to reconsider his resignation and elaborate on the concerns. Jagadeesan said that “every board member” tried to convince him to retract or clarify his comments, but he refused.

Board members also indicated they were “surprised” by the move, noting that no specific issues were formally raised during the discussion. Despite the sharp market reaction, analysts are increasingly seeing the correction as an opportunity rather than a sign of deeper concern.

Deven Choksi said the decline pushed the stock into a “deep value” zone, though he acknowledged that valuations may now reflect a discount due to recent developments.

Ashika Capital’s Ishan Tanna said the situation appears to be strategic rather than structural. “The recent resignation of the chairman looks like a buy-on-dips opportunity rather than a structural concern,” he said, adding that the bank’s long-standing track record of robust processes offered comfort.

Tanna also highlighted that management commentary points to differences in value systems rather than any regulatory or compliance issues. “It appears to be more about differences in value systems, and not related to any regulatory or compliance issues,” he said.

This view is widely echoed by market participants. According to sources quoted by ET Now, the resignation was not linked to any concern raised by the Reserve Bank of India but stemmed from long-standing differences over certain practices.

Veer Growth Fund CIO Paresh Bhagat said the development does not materially change the bank’s fundamentals. “The absence of any stated business or financial concerns reinforces that this is not an operational signal,” he said, adding that leadership continuity at the CEO level remains intact.

While near-term sentiment remains cautious, the Street appears to be focused on valuations and long-term fundamentals, although clarity on developments surrounding the resignation remains limited.