India's HDFC Bank, Kotak Mahindra Bank Stocks Surge As RBI Eases Liquidity Coverage Ratio

HDFC Bank and Kotak Mahindra Bank surged over 2% on Tuesday morning, with fresh regulatory support adding momentum to an already bullish outlook. 

The Nifty Bank index, too, surged to the day's high in morning trade, the sentiment buoyed by the Reserve Bank of India's (RBI) release of its final guidelines on the Liquidity Coverage Ratio (LCR). 

The move signals a more accommodative stance to reinforce stability without stifling growth.

A key highlight of the new guidelines is the relaxation in the run-off factors — the assumed proportion of deposits expected to be withdrawn during financial stress.

The revised norms are much lower than those proposed in the draft, which has boosted sentiment. 

By lowering these thresholds for retail and non-financial corporate deposits, the central bank has effectively freed up liquidity for banks. This change reduces the need for banks to hold large buffers of high-quality liquid assets, giving them more breathing room to lend and invest.

The final RBI guidelines released on Monday state that the additional run-off rate on retail and small business customer deposits accessible through Internet and Mobile Banking (IMB) will be 2.5%, lower than the initially proposed 5%. 

The central bank has also extended the implementation timeline to April 1, 2026.

Brokerage firms like IIFL have highlighted that banks with a higher proportion of TASC (Trust, Association, Society, and Club) and other non-financial operational deposits are likely to benefit relatively more. Key beneficiaries include Federal Bank, RBL Bank, Kotak Mahindra Bank, HDFC Bank, and Bank of Baroda.

Data from Stocktwits indicates that retail sentiment on HDFC Bank remains 'bullish.'

This week, SEBI-registered analyst Harika Enjamuri posted her analysis on Stocktwits following HDFC Bank's fourth-quarter earnings. 

She sees a consolidation range of ₹1,795–₹1,875.90 for the stock, setting the stage for a potential rise toward ₹1,950–₹1,985, with ₹2,000 as a key psychological threshold. 

Enjamuri also highlighted that any pullbacks toward ₹1,875 could offer retest opportunities, provided the ₹1,795 support level remains intact for HDFC Bank.

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