Yes Bank at 52 week low, What to do in YES BANK now?
It seems that the problems for YES Bank will not end soon. This is for the second consecutive day, YES Bank shares have fallen by more than 9%. Today on 28th September 2018 Yes bank share touched 165 on NSE today. It is said that Madhu Kapur has sold some shares (0.04% stake) of YES Bank in the market on 21st September.
Yes Bank was trading at 319 when the RBI first questioned the discrepancy between the NPAs shown by Bank and the actual NPAs RBI estimated. There was a difference or misappropriation of about 319% which raised the alarm for all the Investors of YES BANK and they all started exiting the stock. YES Bank share corrected by 34% that day with low of 210 and closed near 226. On Wednesday Yes Bank Management sought an extension of at least 3 months for CEO and MD Rana Kapoor after the step-down date of 31st January 2019 decided by RBI. The share price was 2% up but couldn’t stay in green for long. Investors hoped that 200 will become support for YES bank and decided to bottom fish in the same. But share broke that important psychological level today and touched it’s 52 week low of 165 so far.
What will happen in the share price in the future?
The recent turmoil in NBFCs, HFCs and Financial Sector in stock has pulled Sensex down by more than 1100 points in intraday last week. The government can not afford big damage to Banking and Financial system of India before upcoming elections. Modi government has already announced Mergers of Public sector banks to reduce their effective NPAs. Major private banks like Axis Bank, ICICI Bank and Yes Bank are already facing the Leadership Crisis, as none of them was prepared for the untimely exit of their CEOs/MDs. But Corporate Governance issues have forced them to step down before completion of their tenure. Same is true for Yes Bank. In the Article of association of the company, there is a clause that Rana Kapoor cannot be removed from the Managing Committee/ Board of the company. So directly or indirectly he will lead the organization in the future as well. Therefore once the successor/Leader is confirmed stock will see good rally again.
What to do in YES Bank now?
Valuation-wise YES bank was very expensive stock above 300 (post-split). 28% CAGR growth has made many Investors rich in this company in the past. As this stock is available in cheaper valuations sooner or later good buying will emerge in this bank.
Traders can keep Stop Loss of 180 and Buy it for the short team targets of 200, 220
Investors should accumulate this bluechip stock by nibbling small quantities ( as we can’t predict exact low level, let’s wait for the double bottom structure to confirm the exact level to enter the stock if you want to buy lump sum in one shot)
Disclaimer: Please consult your financial advisor before taking any investment decision. This post is only for educational purpose. I am NSE’s Certified Investment Analyst and can give my views on Investment. I am not SEBI registered Advisor so I can not give any Recommendations. Don’t consider my views as my recommendation. Thank you.