The BSE building in Mumbai

Another Black Friday for the bourses

The month-long moratorium imposed on YES Bank was evidence enough to believe that the stock would see tremendous volatility. During the day’s trade, YES Bank touched its new life-low of ₹5.55 a share–a drastic fall of 83.28% over its previous close and a wash-out of 94.33% compared to its 52-week high price of ₹285.9 on April 3 last year. The YES Bank stock closed the day at ₹16.2, a fall of 56% over Thursday’s close.

Compared to its Thursday’s close of ₹36.85 a share on the BSE, the stock opened at ₹33.2, which also remained its day’s high.

The crisis of confidence also rocked the BSE Bankex, which fell 5.3%, or 1,742 points, from the previous day close, to touch the day’s low of 31,392.3 points on Friday. India’s largest public sector bank State Bank of India (SBI), which has shown in-principle interest in investing in YES Bank, was not spared the hammering either.

Compared to the previous day’s close of ₹288.3, SBI’s share price fell 10.73% to touch the day’s low of ₹257.35. At close, SBI recovered marginally to close down 6.19% at ₹270.45.

The toxic cocktail of the YES Bank crisis and the rising number of coronavirus cases, which affected the global market sentiment, led to a fall of over 2.32% on the S&P BSE Sensex and 2.57% on the National Stock Exchange’s Nifty 50 at closing.

However, during trading hours the Sensex lost over 1,459 points or 3.79% at the day’s low of 37,011.09 points, and the Nifty 50, too, shredded over 441 points or 3.92% to touch the day’s low of 10,827.4 points.

According to Deepak Jasani, head, retail research at HDFC Securities, statements from corporate chieftains helped bring some stability to the free fall in the stock price of YES Bank. “But the collateral damage to the broader market expecting the second and third-degree impact of this event was to be seen to be believed,” he said.

In Jasani’s view, market participants now remember the IL&FS issue when a similar panic subsisted for some days, and the progress on recovery of money from the lender has been very slow so far. “However, YES Bank being a scheduled commercial bank, the situation of depositors is much stronger but the same cannot be said about the shareholders,” Jasani said.

On the markets at large, Jasani believes the sentiment could revive only if global markets settle down and fears of a global slowdown recede soon. On a similar note, Vinod Nair, head of research at Geojit Financial Services, says that the Friday sell-off in Indian equities was triggered by a weak global trend due to the coronavirus outbreak, restricting international travel and trade.

Nair also believes the YES Bank moratorium enlarged domestic concerns over the safety of the financial system and the Indian rupee too weakened past 74 levels due to these issues. “The bailout is a positive development, lowering long-term systemic problems, and will increase safety for depositors,” says Nair. “Market will be watchful about the final resolution to be offered by the RBI and SBI soon.

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