YES Bank shares have experienced a sharp decline, hitting 52-week lows four times in just seven trading sessions. This intense selling pressure follows a pivotal Supreme Court ruling on October 15, which dismissed appeals by the private lender, the central government, and the RBI. The verdict upheld the Bombay High Court's decision to quash the bank's March 2020 write-down of Additional Tier 1 (AT1) bonds worth Rs 8,415 crore.
Before October 15, YES Bank's stock had largely traded above the Rs 20 mark for the past year. However, the Supreme Court's decision triggered a significant downturn. The stock closed at Rs 21.21 on October 14, but quickly plunged to a 52-week low of Rs 16.98 on October 15. Subsequent trading sessions saw further dips, reaching Rs 16.80 on October 19, Rs 16.03 on October 21, Rs 15.65 on October 23, and a fresh low of Rs 15.53 on October 26.
Technical Analysis and Market Sentiment
Despite a minor recovery attempt on October 27, where the stock briefly reclaimed the Rs 16 mark, YES Bank shares remain in an oversold territory. The Relative Strength Index (RSI) has plummeted to 18.3, indicating substantial selling pressure. Technically, the stock is trading below all major moving averages, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day averages.
Shitij Gandhi, AVP - Equity Technical Research at SMC Global Securities, noted a "sharp bearish breakdown" on the daily chart, signaling a significant deterioration in the stock's technical structure. He highlighted that the stock has breached multiple support zones, moving below Rs 17. Gandhi identifies Rs 17 as immediate resistance, followed by Rs 20 and Rs 21, with declining moving averages around Rs 22-23 acting as further hurdles. On the downside, immediate support is seen around Rs 15.50, then Rs 15 and Rs 14, with a sustained weakness below Rs 17-18 potentially extending the decline towards Rs 14-12 levels.
Brokerage Outlook and Price Targets
Global brokerages have adopted a cautious stance on YES Bank. Goldman Sachs has set a price target of Rs 17, while Citi projects a potential decline to Rs 16.50. Kotak Institutional Equities and Nuvama Institutional Equities have assigned even lower target prices of Rs 16. Morgan Stanley maintains an 'Underweight' rating with a target price of Rs 17.
Nuvama Institutional Equities reiterated its 'Reduce' rating, expressing concerns over the bank's core profitability and the potential financial impact of the AT1 bond liability, which could restrict growth. Nuvama also lowered its target price to Rs 16 from Rs 22, while identifying a potential capital infusion from Japan's SMFG as a key factor to monitor.
In contrast, Ventura Securities remains bullish, maintaining a 'Buy' recommendation with a target price of Rs 24.20. This implies a potential upside of 39% over the next 24 months from the prevailing market price, presenting a divergence in expert opinions regarding the bank's future trajectory.