F&O Stock Falls 10%, Investors Caught Off Guard!
Today is a very good day for investors with the benchmark index crossing the 18,000 mark for the first time after it plunged below this same level on 15 September 2022. With a 1.27% rally in the Nifty 50, all 11 sectoral indices ended the session on a positive note. However, not all investors had a cheerful session, some of them had one of the worst ones.
Portfolios of investors having Bandhan Bank (NS:) shares took a massive hit today, as the stock crashed over 10% after it reported a weak Q2 FY23 report. The bank has a market capitalization of INR 43,853 crores and has already been one of the most expensive private-sector banks out there. As per the FY22 earnings, the profit of INR 125.79 crores which is 94.3% less than the FY21 profit of INR 2,205.46 crores, results in a very high P/E ratio of 348.63. To put it in perspective, the sector’s average is a mere 21.4!
Not just that, the company also failed to impress the street with its Q2 FY23 numbers, reporting a net profit of INR 209.28 crores, which is over 76% down from the previous quarter and the lowest in 4 quarters. The bank’s net interest margins (NIMs) also contracted by 100 basis points on a QoQ basis to 7%. To add to already weak numbers, many brokerage houses have also cut their price targets on the stock.
Image Description: Daily chart of Bandhan Bank with volume bars at the bottom
Image Source: Investing.com
All of this brewed a very bearish session for the stock which ultimately tanked over 10% to the day’s low of INR 237.7. More importantly, the volume for the day was recorded at over 48.55 million shares which is the highest one-day volume in over 26 months. This kind of selling spree depicts that a lot of investors hurried to liquidate their holdings as soon as the market opened.
This is a very bearish sign for the stock as a trend accompanied by a volume rise is considered to be a stronger one hence a possibility of a further fall cannot be ruled out. However, the next support level is quite near, at around INR 230 which is less than INR 10 away from the CMP of 238.55. As the stock crashed in double digits today, a bounce back from here could easily come which would be a good opportunity to exit long positions, not to make new long ones. This counter-trend rally should not be deemed to be a reversal unless one sees some kind of signs of bottoming out such as a bullish divergence, double bottom pattern, etc.
Today is a very good day for investors with the benchmark index crossing the 18,000 mark for the first time after it plunged below this same level on 15 September 2022. With a 1.27% rally in the Nifty 50, all 11 sectoral indices ended the session on a positive note. However, not all investors had a cheerful session, some of them had one of the worst ones.
Portfolios of investors having Bandhan Bank (NS:) shares took a massive hit today, as the stock crashed over 10% after it reported a weak Q2 FY23 report. The bank has a market capitalization of INR 43,853 crores and has already been one of the most expensive private-sector banks out there. As per the FY22 earnings, the profit of INR 125.79 crores which is 94.3% less than the FY21 profit of INR 2,205.46 crores, results in a very high P/E ratio of 348.63. To put it in perspective, the sector’s average is a mere 21.4!
Not just that, the company also failed to impress the street with its Q2 FY23 numbers, reporting a net profit of INR 209.28 crores, which is over 76% down from the previous quarter and the lowest in 4 quarters. The bank’s net interest margins (NIMs) also contracted by 100 basis points on a QoQ basis to 7%. To add to already weak numbers, many brokerage houses have also cut their price targets on the stock.
Image Description: Daily chart of Bandhan Bank with volume bars at the bottom
Image Source: Investing.com
All of this brewed a very bearish session for the stock which ultimately tanked over 10% to the day’s low of INR 237.7. More importantly, the volume for the day was recorded at over 48.55 million shares which is the highest one-day volume in over 26 months. This kind of selling spree depicts that a lot of investors hurried to liquidate their holdings as soon as the market opened.
This is a very bearish sign for the stock as a trend accompanied by a volume rise is considered to be a stronger one hence a possibility of a further fall cannot be ruled out. However, the next support level is quite near, at around INR 230 which is less than INR 10 away from the CMP of 238.55. As the stock crashed in double digits today, a bounce back from here could easily come which would be a good opportunity to exit long positions, not to make new long ones. This counter-trend rally should not be deemed to be a reversal unless one sees some kind of signs of bottoming out such as a bullish divergence, double bottom pattern, etc.
