The million dollar answer, which at least 11 lac plus retail investor tribe is looking for. All of them are stuck so badly at high levels, that any bad news can give now a heart attack. For sure, all retail investors want yes bank to find its lost sheen. but has yes bank bottomed out?
This is going to take few minutes of yours, as my intention is to build perspective for you on it.
Be patient !!! and enjoy reading.
Bottoming of yes Bank is a different question. Poor retail investors are even looking to average out at these levels to bring their cost price down. Rational thinking as completely gone for a toss, this is the main reason retail investor is losing money. This gives me another topic for you to write, about concept of averaging or bottom fishing and various aspects. Any news on bank keeps them on their toes. All this effort is for what, all are waiting and praying for just one thing, some how if their purchase price comes and they come out. Many of them have thought of saying bye bye to stock market once they get back their capital.
Let me put this straight – Bhai sara josh thanda ho gaya…. Kisi tarah price aa jae bus. Maa kasam iske baad sirf FD mein paise dalunga…vo bhi sirf SBI ki. This are the words of many who have been writing emails or calling me now for advice. many warriors of stock market got martyred by YES Bank, and on top of it current economic slowdown in India, trade war between USA and dragon is keeping investors on edge.
My take on, Has YES Bank bottomed out is not subjective. Since I have vested interest in Bank and I have made investment in bank at Rs.29.40 per share recently. I have written a blog for my readers on it already, that how the trade came in profit of $3025 on day one. Although, I am still counting to make it big and holding on to the trade.
Also, making my 18300 shares as underlying I have already done another trade in options of yes bank, I will write on it for you in option millionaire series shortly. By the way, I am close to making profit of $155 on the trade. I really love this boss free life and making money passively while engaged in different ventures. I am sure my writing is going to create some social impact, and help people create wealth.
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So the answer of yes bank lies in doing a technical analysis and fundamental analysis with objectivity in current scenario. Doing both in this read will make it very lengthy. lets take Technical analysis first.
Technical Analysis of YES Bank.
So my dear retail investor do not fall in any trap of people calling to give you tips or rumors any more. because I am going to do a detailed technical analysis here. Before starting for sake of beginners technical analysis deals with price volume action, moving averages, indicators giving over bought/sold levels, relative strength, various chart patterns etc.It actually tries to draw inference though charts about traders possible behavior. I’ll also take into consideration recent factors that happened in bank or giving references so it makes it easier for you to get the answer of question – has yes bank bottomed out.
Support and Resistance levels
Because the chart has actually gone bad, there is only possible one support in YES Bank, which is around price range of Rs.32-35. If this range breaks, to what low level Yes Bank will go cannot be answered. I arrive at this range because Reliance Nippon Mutual fund did sell at these levels pledged shares of Rana Kapoor in open market. the highest supply of those 10 Crore shares came around these levels and got absorbed. looks like this should act as floor for share price for now. Until any news based events takes it further down. If that happens booking out of yes bank from technical point of view would be correct.
The northward journey of yes bank is full of thrones and an upheaval task. As trapped and frightened retail investors will come with their supply of shares to sell. I am covering next 3 resistance levels for banks price.
- Price range of Rs.45-51. This is first biggest hurdle which is going to come as Rana Kapoor and his firm YCPL has sold shares in this range to pay off debt, which was mainly absorbed by retail investors. They did averaging thinking bonanza coming their way, but price felt further and they got trapped. They are waiting impatiently for it to come up so they can exit.
- Price range of Rs.60-71. This is a big range of nearly 19%, but going to act as a tough resistance. Because, if you all remember a news came mentioning Rana Kapoor trying to sell stake to Paytm. Retail investors bought truck loads thinking, they are going to get a fortune at throw away price. But the news fizzled out within a day not giving any chance to small investors to exit. Now all those who bought at that time are sitting in 50% loss in matter of 2 weeks. Another failed attempt of bottom fishing and for sure majority of them waiting eagerly for their price to come to exit.
- Price range of 83-95. Again a range of 15%, but it is sad truth. This is the price range where yes bank did their QIP. Again investors build hope of finding a bottom around these levels and bought in big quantities. Although bank did got a euphoric response from institutional investors and there was more appetite from their side. I will explain this part when I take up fundamental analysis of banks current health. Sadly, investors have seen their capital going to 1/3rd level. who likes it. they must be cursing their decision – KIS MAHURAT MEIN LE LIYA… FAS GAYE BURI TARAH.
There is no point talking resistance beyond this now, I will present an analysis again, if these levels are crossed. But one is thing is sure, once these levels are taken out. The resistance levels will start acting as Support levels for stock price.
At current juncture, they really don’t matter. As I have mentioned earlier the chart structure has really gone bad. And simple or exponential averages will not be giving any indicator to take call on direction of stock price.
Relative Strength Index (RSI)
This is an indicator which gives indication of overbought or over sold levels. If a stock is above the index of 70 it goes in overbought zone whereas if it falls below 30, stock gets in over sold zone. Both the extremes gives idea of reversal and correction of prices. In current scenario yes bank is in oversold zone and there is a technical bounce back expected.
As per the latest news, rumors etc, it doesn’t appears that there is any big supply for bank shares waiting to come in market. Until unless there is some new skeleton coming out on NPA front. Retail will bring come with supply around their resistance levels as explained above. Moreover more than technical patterns, Bank share has become news driven and giving extreme volatile moves in either direction.
Technicals only gives you information of stop losses and targets one is looking for, through chart patterns. So is this exercise futile in case of yes bank. I will say NO. because at least all investors get to know the levels which they should be hooking upon.
As far as yes bank shares upward journey is concerned is concerned, the news which I am eyeing on are
- Who takes stake in Bank and at what level Gill and team does it.
- Q2 results of bank.
- A close watch at any new account going for slippage and development in cases of DHFL, ESSEL and Indiabulls.
Readers, keep spreading the word. Saving hard earned money of retail investors is responsibility of all of us. Making them aware of situation is important and at right time.
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Keep minting, meanwhile I come back shortly as promised. My new article will be on how I made $155 through Options and fundamental analysis of bank. If you want me to start discussing on other stocks too, pls write to me. I’ll be happy to take up that.