News Analysis

Retail investors in YES Bank catch a falling knife, lose ₹2,500 crore on Friday

Rajalakshmi Nirmal BL Research Bureau | Updated on March 06, 2020

From June to December, while FPIs sought to exit the stock, retail investors lapped them up in the hope of future gains

Small investors who bet their money on YES Bank stock are in the lurch now. The stock witnessed a freefall in the bourses on Friday. It opened at ₹33.20, slipped to as low as ₹5.55, and closed the day at ₹16.20.

Post-market, the RBI announced a restructuring plan for the bank. While details are expected on who besides SBI will pitch in with capital, the RBI press release said the investor bank will invest in the equity of YES Bank at ₹10/share.

Given that the stock closed at ₹16, it looks like there may be more pain on Monday as trading opens.

In a rush to make some quick money, retail investors seem to have burnt their fingers in the YES Bank stock. Last June, the total retail individual shareholding in the stock was at 20.46 per cent, but end-December 2019, it was 47.9 per cent.

It looks like retail investors have taken up shares sold by foreign portfolio investors (FPIs) and domestic institutions, giving them an exit. Sample this: In June 2019, the total shareholding of FPIs in YES Bank stock was 33.69 per cent, while that of mutual funds was 6.59 per cent and insurance companies, 10.08 per cent (LIC’s holding alone was 8.87 per cent). Retail investors together held 20.46 per cent.

However, end-December 2019 data from BSE show a very different picture. While retail investors’ holding had almost doubled to 47.9 per cent, that of FPIs had more than halved to 15.17 per cent, and that of MFs and insurance companies had fallen respectively to 5.09 per cent and 8.24 per cent (LIC’s 8.06 per cent).

In June, the stock price of YES Bank was around ₹110 a share. So, it has been the retail investors who have taken a blow in this entire drama.



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Published on March 06, 2020
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