This triggered one of the worst selloffs on the counter on Dalal Street.
“With the stock moving out of the F&O list, all long positions will now be unwound and no fresh positions will be taken. In both cases of shorts or long unwinding, there would be loss of value,” said Vadodara-based Milan Vaishnav of Gemstone Equity Research & Advisory Services.
The stock eroded 50 per cent of its value in Friday’s trade. By 10.15 am (IST), sell orders for 24 crore shares piled up in cash market, mostly at a price of Rs 20.25 apiece. But there was no buyer.
Later, two hours into trading, the stock extended its slide to 85 per cent, as it hit a low of Rs 5.55. This was the biggest slide for the stock ever. At this price, the stock was at the lowest level since April 2009.
RBI said it has superseded the board of YES Bank for a period of 30 days, owing to serious deterioration in the financial position of India’s fifth largest private bank. The central bank capped the withdrawal limit for bank customers at Rs 50,000.
A bank under moratorium suggests no equity value is left in the bank, said analysts.
“Any resolution for YES Bank is proposed more from the perspective of deposit holders and systemic stability, and not from the perspective of YES Bank equity investors or even perpetual bond holders,” said Nomura India.
Placing the bank under moratorium implies that equity value in the bank would be negligible, the brokerage said.
There were reports that depositors were lining up at YES Bank ATMs, and online customers were witnessing app freezes early on Friday, after RBI capped cash withdrawal limit at the bank at Rs 50,000.
The central bank also took over the bank’s board after the Ravneet Gill-led management failed to raise capital by bringing in a strategic investor.
Directionally, the development is negative for the stock, given that new capital is likely to come at a steep discount, said Nirmal Bang Institutional Equities.
“The motive behind such move has been to restore depositors’ confidence in the bank. For long, we have been of the view that it is highly unlikely that RBI would allow a bank to fail. It would negatively impact the perception of bank deposits’ safety, which RBI cannot afford. We continue to keep Yes Bank under review due to lack of clarity on the way forward,” said Nirmal Bang Institutional Equities.
Vaishnav said technical charts suggest recovery is unlikely for YES Bank shares for now.
