HDFC Bank has touched a 52 week high of Rs 1,204.95 and an intra day low of Rs 1,150.50. Currently, the share is quoting at Rs 1,199.15, up Rs 50.40, or 4.39%. It is trading with volumes of 437,574 shares, compared to its 5-day average of 97,404 shares. Yesterday the share closed down 0.05% or Rs 0.55 at Rs 1,148.75.

HDFC Bank set the tone for the first quarter results of the banking sector by reporting a 34% increase in its net profits. Banks are expected to report a healthy increase in total income as their margins are likely to be stable. The bank is also set to raise $ 600 million through US equity offering. HDFC Bank, India's third-biggest by market value, plans to raise about $ 600 million selling shares on U.S. markets as demand for credit increases in the world's fastest-growing major economy after China. The Mumbai-based bank didn't disclose the number of American depository shares it will sell, according to documents filed with the Securities and Exchange Commission. Each will be equal to three shares of stock.

"Rapid branch expansion would ensure core deposit growth as well as sustainability of its relatively higher CASA ratio. On a post-diluted basis, we expect HDFC Bank to report EPS of Rs 42.8 in FY08 and Rs 58.6 in FY09. The book value in these years would be Rs 332 and Rs 379. RoE in FY08-FY09 is likely to be 17%. The stock currently trades at 19.6x FY09E EPS and 3x FY09E BV. Maintain Buy," says a Motilal Oswal report.

Many banks had raised their prime lending rates (PLRs) by 50-75 basis points towards the end of the last quarter or beginning of the first quarter. But at the same time, they have aggressively expanded their deposit base. The banks with low base of low-cost deposits would face pressure on their margins, while those with a higher base will be able to maintain their margins.