YES Bank: For retail investors, is this a case of bottom fishing or catching a falling knife?

KS Badri Narayanan Chennai | Updated on July 17, 2019 Published on July 17, 2019

Yes Bank. File Photo   -  Bloomberg

3.7 lakh fresh retail investors entered YES Bank in Q1

 YES Bank turned attractive to retail investors in the April-June period when the stock crashed 60 per cent to ₹108.75 from ₹276 level. YES Bank attracted 3.7 lakh fresh retail investors — categorised as individuals holding shares worth up to ₹2 lakh — during the period. Thanks to these freshers, the retail shareholding in the private sector lender jumped to 11.13 per cent as of June 30, from 7.39 per cent at the end of March quarter.

This sharp rise in holding by retail investors was in contrast with the strategy adopted by foreign institutional investors and mutual funds.

FPIs, MFs pare stake

In all, 625 foreign portfolio investors were holding 40.33 per cent stake in the company at the end of March 2019. But at the end of June, 26 FPIs moved out of the stock, and the overall FPI holding fell to 33.69 per cent.

However, some FPIs have increased their holdings in YES Bank. For instance, College Retirement Equities Fund’s holding has increased to 2.31 per cent from 1.87 per cent. Similarly, Government Fund Global’s stake jumped to 1.92 per cent (1.55 per cent). Jwalamukhi Investment Holdings (of Westbridge Capital) currently holds 1.78 per cent; its name was not found in March quarter data, possibly it could have held less than 1 per cent stake at that time.

Thirty three mutual funds held 11.13 per cent stake in YES Bank, but seven of them exited during the quarter, with the stake held by MFs falling to 9.54 per cent. Even the 26 fund houses that were holding on to YES Bank shares through various schemes, such as UTI Mutual, SBI Mutual and Franklin Templeton MF, reduced their holdings. UTI MF hold 1.32 per cent (1.61 per cent), FT 1.27 per cent (1.41 per cent) and SBI 1.25 per cent (1.61 per cent).

However, Life Insurance Corporation of India maintained its holding at 8.87 per cent (8.88 per cent), even as the overall holding by insurance firms fell to 10.08 per cent (11.10 per cent).



HNIs pare stake

High net worth individuals, who generally are smart in identifying a trend well in advance of an actual event, also reduced their stake to 1.74 per cent (2.83 per cent). The number of HNI investors too fell to 132 from 191.

According to analysts, retail investors accumulate shares of companies that are battered for one reason or another, in anticipation of a trend reversal. But most of the time, they get stuck with dud stocks.

“Most of the time, retail investors are stuck with such falling stocks. To name a few, Suzlon Energy, ADAG stocks, such as Reliance Power and RCom, HDIL, Punj Lloyd, and so on,” said a Chennai-based analyst. “Hope their belief in YES Bank does not fall in this category. But if the stock fails to revive, they should be prepared to book losses and move on,” he added.

Published on July 17, 2019
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