Why are shares of HDFC Bank rising today?

Shares of HDFC Bank, the country’s largest private sector bank by assets, witnessed a surge in buying today, in line with the BSE benchmark Sensex. The share price of private sector lender gained nearly 3% in the first hour of trade on Monday, while the 30-share Sensex rose 195 points, or 0.35%, to 55,746.

Extending its gaining streak for the fifth straight session, HDFC Bank shares opened higher at ₹1,411 against the previous close of ₹1,397 on the BSE. The stock price gained as much as 2.63% to hit a high of ₹1,433.75. The market capitalisation of the country’s third most valued firm rose to ₹7.92 lakh crore.

It has risen 8% over a week, while it dropped nearly 3% in one month. The stock has given negative returns of 3% in the last one month and 8% over one-year period. It currently trades higher than 5-day moving averages, but lower than 20-day, 50-day, 100-day, and 200-day moving averages.

What fuelled rally in HDFC Bank shares?

The share price of HDFC Bank surged after the Reserve Bank of India (RBI) removed a ban on its business-generating activities planned under the bank's Digital 2.0 program. In December 2020, the RBI had barred the private lender from issuing new cards and launching new digital initiatives after incidents of repeated technological outages in internet banking, mobile banking and payment utilities over the past two years. The ban on sourcing of new credit cards was imposed after Mastercard and American Express failed to adhere to data localisation rules.

“We would like to inform one and all that the Reserve Bank of India (RBI) has lifted the restriction on the business generating activities planned under the Bank’s Digital 2.0 programme, vide its letter dated March 11, 2022,” HDFC Bank said in an exchange filing on March 12.

HDFC Bank’s Digital 2.0 program intends to provide products to its customers for frictionless financial experience. It will help customers to move from a single transaction to a complete financial solution journey such as loan disbursement, payments and investment.

In August last year, the central bank had partly lifted the technology ban on the lender on sourcing of new credit cards.

HDFC Bank is one of the biggest card issuers in the country with around 1.5 crore credit cards and nearly 3.8 crore debit cards. The bank aims to add five lakh new credit cards to its portfolio every month beginning February 2022 to regain its market share and cement its leadership position in the credit card issuing business.