Bandhan Bank, a foreign institutional investor (FPI) favourite, has fallen 38 per cent since May high and is in a tight bear grip. Technical indicators suggest the stock is in deep oversold zone and has a crucial support at Rs 200, failing which more the scrip can attract more downside. Upside resistance is seen at Rs 235-250 level.
FPIs held 30.15 per cent stake in Bandhan Bank while HDFC and LIC owned 4.95 per cent and 3.69 per cent stakes, respectively, in this private lender, as of September 30.
On Friday, the scrip fell 2.17 per cent to hit a 52-week low of Rs 216.10 on BSE. The 14-day RSI gave a reading of 26.86 level. A reading below 30 is considered ‘oversold’.
Osho Krishan, Senior Analyst for Technical & Derivative Research at Angel One said the stock has witnessed a significant breakdown from the supporting trendline of Rs 250-odd level.
“Technically, the stock has entered the oversold region and is heading lower toward the next support, which is placed around the Rs 200-odd zone. If it manages to sustain above the subsequent support of Rs 200, some modest recovery could be seen in a comparable period. On the contrary, the intermediate resistance could be seen around the Rs 250 level.,” Krishnan said.
Pavitraa Shetty of Tips2trades said a below average September quarter results despite signs of strong credit growth have dampened investors’ spirits, leading to Bandhan Bank seeing relentless selling. She believes traders can buy the stock only on a close above Rs 235, as a fall till Rs 210 looks likely, she said.
“On a close above Rs 235, the stock can see a bounce back towards Rs 2,56-275 in the near term,” Shetty said.
Bandhan Bank reported a net profit of Rs 209 crore for the September quarter compared with Rs 3,009 crore loss in the year ago period due to higher asset quality stress, percolating into high interest income reversals and increased write-offs.
“High slippages fed into higher interest income reversal ensuing a 100 bps sequential NIM dip, thus lowering NII (down 13 per cent QoQ). Notwithstanding weak H1FY23, we believe, the end of asset quality uncertainty seems nigh. That said, recovery trends are far slower than anticipated. Volatile performance dented investor confidence. A re-rating hinges on consistent earnings delivery,” Elara Securities said in a post earnings note.
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