Why the stock markets were down on 03rd October and why did Yes Bank rally by 33% in a single day? Is it short covering?
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Yes Bank is again among top talks in the market with three tech giant companies that include Microsoft Corp. in regards to infusion of capital. The discussion was to sell the Yes Bank's nearly 15% stake through a fresh equity issuance a global tech company.
This deal may amount to around ₹2,000 crore, and it can be used by the bank to its digital banking and payment system plans.
Currently, shares of Yes Bank has been doing worse after RBI had barred the reappointment of co-founder and former CEO Rana Kapoor. The trade price of the bank's share is Rs. 43.35 approx. which has slumped to 89% since August 2019.
According to an online report, Yes Bank had lodged a complaint against "fake news and rumors" on social media about its negative finances. the complaint claimed that the reason for such fake news regarding the bank was to scare depositors.
The police authority is working on the bank's request to detect the source of such fake news.
Let me address your stock market query first. The markets were down largely because of global cues. Markets were closed on 02th October so did not get a chance to react to the 10-year low manufacturing numbers in the US. Wednesday was a lag effect of that. Also, Indian banks and financials are under severe stress due to loans given to NBFCs and to real estate company and markets are worried that at some point we could see a cascading effect of all this. That is the reason the markets corrected so sharply.
Yes Bank, I think it was more because of the massive correction it saw all these days. Big overhang was the stake of Rana Kapoor which was being sold in the market by the financiers and that was completed on Monday. Now Kapoor has only 0.8% stake left in the company. The new CEO has also written off most of the bad loans. While there will be more pain in the next few quarters, the worst at least appears to be over for the stock. That is what is holding the stock up. On 03th October the stock a mix of buying at lower levels and also aggressive short covering which led to the stock moving up so sharply in one day.