Shares of YES Bank tanked 4 per cent in Tuesday’s trade amid a broader market weakness. The scrip has fallen 17 per cent over December 14 high of Rs 24.75 apiece. A couple of brokerages have neutral to negative ratings on the scrip. Technical charts suggest the stock could be a ‘buy on decline’ opportunity going ahead.
The scrip fell 3.74 per cent to hit a low of Rs 20.60 level. The scrip has fallen 17.76 per cent in the last four trading sessions.
Independent Analyst Manish Shah said YES Bank traded in a band of Rs 20-19.50 for the last two years. In last couple of weeks, it has broken out of this very wide trading range, he said.
“The thrust out of the pattern was with huge volumes and a very wide trading range. In Wyckoff terms, the price action suggests that it is in a mark up phase. In a mark up phase, prices tend to show a rise at a fast pace. The current decline in last couple of days from the high at Rs 24.50 is a good opportunity to enter into the stock. Major support zone is at Rs 19.50-19. Observe price in this stock and short term drop to Rs 19.50-19 is a good opportunity to buy. Keep a stop below 17.50. Upside potential is 26.50-27 over next several weeks,” he said.
Santosh Meena, Head of Research at Swastika Investmart said YES Bank crossed the 20-mark after two years of consolidation, which is a good sign for traders.
“However, Rs 25 is a significant barrier, where profit booking is occurring. We may see a period of consolidation after a vertical move where Rs 18 should act as a floor now; therefore, Rs 18–25 is a well-defined trading range in the near term, and any decisive move from this zone will dictate further direction,” Meena said.
Kotak Securities in a recent note on the private lender said the capital infusion of Rs 8,900 crore by global private equity investors, Carlyle Group and Advent International, would help increase the bank’s net worth by 25 per cent, which would move its Tier 1 ratio closer to 15 per cent. The lender recently indicated that it would look to close the deal with JC Flowers, which would result in a significant transfer of its bad loan portfolio to the ARC, with no earnings impact, Kotak said.
This brokerage has a target of Rs 16 on the YES Bank stock. Morgan Stanley recently said YES Bank is moving in the right direction post 2020 NPA crisis. Unlike the previous cycle, the bank has focused on increasing the share of retail on both sides of the balance sheet, it said. That said, the foreign brokerage felt YES Bank valuations are already pricing in most positives.