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Yes Bank shares end 8% lower after RBI appoints additional director in rare move

FE Online
RBI slaps Rs 11 lakh fine on Yes Bank for violating money transfer norms

Shares of India’s major private sector lender Yes Bank tumbled on Wednesday after RBI appointed R Gandhi as additional director in a rare move. Yes Bank share price ended more than 8% lower at Rs 143.65. The shares have fallen to their lowest level since March 2016. Taking stock of the development, Asutosh Mishra, head of research of institutional equity at Ashika Stock Broking, said that the central bank’s move signals an increased level of scrutiny on the private lender. This is the the first time in “many years” that RBI has appointed a special director to a large bank’s board, Mishra told Reuters. The RBI’s latest action comes just day’s after Yes Bank reported a shock loss in the January to March period.

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Rising bad loans drove the bank to its first ever quarterly loss, leading global brokerage Macquarie Research to set a rare double-downgrade on the company’s stock. In the latest quarter, Yes Bank reported a whopping Rs 1,506 crore net loss for the latest quarter as against a profit of Rs 1,179 crore in the year-ago period as provisions sky-rocketed over nine-times. Higher provisions for possible reverses, including a massive Rs 2,100-crore contingency reserve, was the prime reason for the massive loss, the private sector lender had said in its statement to the exchanges.

Following the development, Yes Bank shares had tumbled nearly 30%. According to Mustafa Nadeem, CEO, Epic Research, currently Yes Bank is not a stock that can be kept with confidence in the portfolio. Technically there were some pullbacks as the stock was coming out from oversold zone and pushing levels up. But that was in the short term and was the outcome of price structure. Some good immediate recovery did get two digit returns. But at present, this is not a stock that can be kept with confidence in the portfolio, he said in a note.

According to the expert, there is some support is at lower levels of 125 – 126 and prices can test them in coming days. We may see some price pullback given they are in oversold territory, but, the trend remains negative and it s a stock that is a sell on any rise towards 165 – 168, he said.