Accident of the Day: This Bank Falls 17% Today, Breaks Covid-19 Low!

The Indian markets began the week on a horrible observe, with all 11 sectoral indices buying and selling with a heavy lower on account of weak international cues. The benchmark index was buying and selling 2.6% decrease at 15,782 and the plunged 2.68% to 52,833, by 9:47 AM IST. Whereas banking shares are additionally speaking a good promoting stress, one financial institution that has turn into the accident of the day is RBL Financial institution (NS:).

The share worth of RBL Financial institution tanked over 17% in early commerce to INR 95.1, after hitting two decrease circuits of 10% and 15%. RBL Financial institution shares not solely plunged beneath the 52-week low however hit an all-time low of INR 93.1, additionally falling beneath the COVID-19 low of INR 101.55.

So what has occurred with the shares of RBL Financial institution that led to an enormous promoting spree at present? Nicely, the inventory had been in a downtrend for a very long time, extra exactly from Might 2019, after it made an all-time excessive of INR 716.4. Nevertheless, at present’s large plunge has been on account of the appointment of a brand new MD and CEO R Subramaniakumar for a interval of three years.

The market didn’t appear to love this variation within the prime administration most likely as a result of the truth that he has come from an expertise of managing public sector banks solely. He has served because the Enterprise Transformation Head at PNB (NS:). He has additionally served on the prime administration of Indian Financial institution (NS:) and Indian Abroad Financial institution (NS:). 

So What ought to traders do after this fall?

Trying on the constant downtrend of RBL Financial institution shares, making an extended place appears a bit dangerous, particularly after at present’s large fall to an all-time low. Some traders would possibly consider a shopping for alternative at these dirt-cheap ranges, however they need to have a plan prepared earlier than plunging into shopping for any inventory at all-time lows. The first cause is that at these never-before-seen ranges, traders usually can’t gauge how extra that fall will proceed, as there are not any helps beneath these ranges.

Picture Description: Each day chart of RBL Financial institution, displaying a constant downtrend with quantity bars on the backside.  

Picture Supply: Investing.com

The amount for the day was recorded at an enormous 60.1 million shares within the first hour of buying and selling, which is the very best one-day quantity since 3 January 2022. This represents that the autumn has been participated by a sheer variety of traders, additional growing the reliability of the pattern.

However what a couple of brief entry? Nicely, a inventory falling to a 52-week low could possibly be candidate for brief promoting. Nevertheless, making a brief promote place after an enormous 17% fall additionally turns into dangerous on account of a possible bounce which generally could possibly be very sharp. The inventory would possibly carry on falling from right here as nicely with none counter-trend rally, however chasing the worth and making a random entry in the midst of a pattern is certainly not a good suggestion.