HDFC Bank ADRs crash another 4% after sharp selloff, hinting at more losses on Friday

HDFC Bank’s American Depositary Receipts (ADRs) on New York Stock Exchange (NYSE) fell another 4%, indicating extending of losses after the stock’s sharp correction on Thursday that saw it shed about 5% and briefly erase nearly Rs 1 lakh crore in investor wealth. The continued weakness in ADRs reflects lingering investor concerns following the abrupt resignation of former chairman Atanu Chakraborty, even as the bank’s management and board have sought to downplay the development.

On Thursday, the stock witnessed heavy selling pressure, with market cap erosion at one point touching around Rs 1 lakh crore. The selloff was triggered after Chakraborty stepped down, citing that certain “happenings and practices” within the bank over the past two years were not aligned with his personal values and ethics. However, the absence of specific details has added to uncertainty.

HDFC Bank chief executive and managing director Sashidhar Jagdishan said the board had urged Chakraborty to reconsider his resignation and elaborate on the concerns. “Every board member” attempted to persuade him to withdraw or clarify his remarks, but he declined, Jagdishan said.

Board members also indicated they were “baffled” by the move, noting that no specific issues were formally raised during discussions. Despite the sharp market reaction, analysts are increasingly viewing the correction as an opportunity rather than a signal of deeper concerns.

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

Ishan Tanna of Ashika Capital said the situation appears tactical rather than structural. “The recent resignation of the Chairman looks more like a buy-on-dips opportunity rather than a structural concern,” he said, adding that the bank’s long-standing track record of strong processes provides comfort.Tanna also highlighted that management commentary points to differences in value systems rather than any regulatory or compliance issues. “It seems to be more about differences in value systems, and not related to any regulatory or compliance problems,” he said.This view is broadly echoed by market participants. According to sources cited by ET Now, the resignation was not linked to any concerns raised by the Reserve Bank of India but stemmed from prolonged differences over certain practices.

Paresh Bhagat, CIO at Veer Growth Fund, said the development does not materially alter 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 focusing on valuations and long-term fundamentals, even as clarity on the developments surrounding the resignation remains limited.