Shares of HDFC Bank rose on Wednesday, a day after the Reserve Bank of India (RBI) partially lifted restrictions imposed on the lender last year. The central bank allowed HDFC Bank, the country's largest lender by market capitalization, to issue new credit cards. The decision comes eight months after the central bank stopped HDFC Bank from issuing new credit cards.

The RBI, on the other hand, maintained the status quo on HDFC Bank's ban on introducing new technology initiatives.

HDFC Bank stated that it would continue to work with the RBI to achieve compliance across all areas. During the session, HDFC Bank shares rose as much as 3.29 percent to Rs 1,564.75 a share on the NSE. The stock provided the biggest boost to the SENSEX and Nifty50.

At 11:15 a.m., the HDFC Bank stock was trading 1.34 percent higher on the exchange at Rs 1,534.95 per share, surpassing the Nifty50 index, which was up 0.38 percent near a record high earlier in the day. At the moment, the Nifty Bank index was up 0.83 percent, boosted by the lender's stock.

JPMorgan maintained an 'overweight' rating on HDFC Bank stock, with a Rs 1,800 target price. The RBI has only partially eased the lender's digital ban, which is a partial gain because credit cards are one of the lender's most profitable businesses, it added.

The good news is that the prohibition has been lifted ahead of the festive season, which begins in September. The lender is seen aggressively rolling out appealing credit card schemes, according to the brokerage, which continues to feel HDFC Bank is the greatest franchise to hold in the financial market.

An 'outperform' rating on the lender's shares and a target price of Rs 2,005, HDFC Bank is projected to recoup its market share in credit cards, having lost 180 basis points of share as of May 2021 since the end of November 2020.

“The RBI's decision would assist this blue-chip in regaining some of its lost sparkle. This will be beneficial for Bank Nifty as well, which has underperformed this year" 

However, it is crucial to note that some of the good news is already priced in, since HDFC Bank is up 6% so far this month, maybe in anticipation of the favorable development," he added.

Following multiple instances of technological breakdowns at the lender, the RBI took an unusual step in December last year enforcing both restrictions.

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