Mumbai: Currently, Indusind Bank’s hit stock may be the main level of rebounding, as the central bank’s weekend guarantees boost investor confidence and sparked a fight for its stock.
Analysts say the Bears that raided the bank’s derivatives counter last week may find themselves trapped when wealthy investors move in. As freshly purchased shares rise, the bear may be rushing to cover up its short bets and spark a rally when it opens on Monday.
On Saturday, the Reserve Bank of India (RBI) said Indusind Bank’s financial situation remains “stable” and “closely monitored” the same. Analysts said they hope the bank’s cash counter will see more bargaining from wealthy clients and home offices as well as derivatives counters to witness shortening of bettors after the RBI statement.
“Given the extent of the price decline, home offices, HNIS and other institutional players are allocating some of their funds to Indusind Bank as part of its risk strategy,” said Independent market analyst Ambareesh Baliga.
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IndusInd Bank stock drops 57% from 52-week high ₹1576.35 April 8, 2024 to ₹672.35 Thursday. On Friday, Holi markets were closed.
bargain
Baliga said for some investors, “meaningfully allocated a portion of its risk to industries after a huge fall. RBI’s statement on banks’ “good capitalization” could lead to further bargaining in cash markets and derivatives shortages, which could support further recovery of prices starting from Tuesday’s lows. ₹606.
Last week, the bears rushed to the industry after its derivative accounting error surfaced. NSE data showed that although some accumulated bearish active futures positions were 57.75 million shares covered on Thursday, the accumulated outstanding futures positions were still 48.18 million shares as of the day.
Since last Wednesday, the stock’s cumulative open positions have crossed the market scope limit (MWPL) set by the stock exchange, the exchange has banned new positions in industrial zone derivatives. As of Thursday, all future and option contracts had 143.87 million shares, while MWPL had 120.8 million shares. Unless the stock is well below the MWPL, new trading will continue to be banned.
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recover
The RBI statement posted in the stock’s NSE cash counter saw a massive delivery volume over two days. While Tuesday’s sell-off witnessed 31.9 million shares delivered a year, 14.28 million shares were delivered every day after nearly five months on Wednesday.
The combined effect of lower levels of cash purchases and derivatives has brought the stock back 11% from its 52-week low ₹606 ends Tuesday to Thursday ₹672.35. Recovery can now continue.
“The recovery may continue to hunt shortages and bargaining as long as there are no new negative surprises hit the counter,” explained Shrikant Chouhan, head of research at Kotak Securities (private client base).
Chouhan said the issue’s “Bank All the Way” was the bank’s disclosure of accounting issues for derivatives before the March quarter results. He added that the street may not have further negative surprises, starting to price on the one-time blow to Indusind Bank’s net worth.
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Chouhan added that in recent blurts, Industrial Bank sold for cheaper than other loans like Yes Bank and Idbi Bank. For example, IndusInd Bank currently trades with 1.09 of YES Bank and 1.45 of Idbi Bank at a price of 0.8. The book value of a company refers to what shareholders will obtain if the company is liquidated today.
Margin funds rise
As industry stocks plummeted, investors also snapped up Indusind stocks through margin trading, which allowed investors to make purchases leverage up to four times. The total amount of funded by all brokers under margin trading facilities has increased to ₹40.09 million Wednesday ₹Monday, 34.3 billion per day.
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Khambatta Securities Advisor Sudhir Joshi said buying margin trading, investors can buy stocks by paying only the lowest profit, while the remaining brokers violate interest, suggesting investors are taking advantage of themselves because they feel “there is a chance to get a quick return in the short term”.
