Down 37% from 2022 high, is the Yes Bank share price a bargain?

Yes Bank

Yes Bank (NSE: YESBANK) share price is hovering near its lowest level since November last year as the outlook of the Indian economy waned. The stock was trading at ₹15.40 on Thursday, which was ~37% below the highest point in 2022. It has underperformed other popular Indian bank stocks like ICICI, Axis Bank, and HDFC.

India economic slowdown

There were three main catalysts for the Yes Bank share price this week. First, the company published its financial results, which showed that the company made some modest progress during the quarter. Its deposits rose to ₹218,018 during the quarter. Deposits rose by ~10.6% on a year-on-year basis.

The other important catalyst that affected the stock was a statement by the CEO of the third-biggest bank in India. As I wrote here, the CEO of Axis Bank warned that the Indian economy was slowing at a faster pace than expected.

He cautioned that the real situation on the ground was worse than what the official numbers were showing. This was important news coming from the head of a bank with millions of customers in the country.

Finally, Yes Bank share price reacted to the shock interest rate decision by the Reserve Bank of India (RBI). Contrary to what I and other analysts were predicting, the bank decided to leave interest rates unchanged at 6.5%. 

In a statement, the bank’s governor said that the outlook of the Indian economy was tampered by additional downside risk from financial stability concerns. Still, the bank said that it will continue watching inflation numbers to determine whether to continue hiking rates further.

Yes Bank stock has been in a downward trend after the end of a three-year lockup expiration of the biggest banks in India. Starting in March, Indian banks that helped rescue the company were able to sell the stock. Therefore, the shares could still come under more pressure in the coming months.

Yes Bank share price forecast

Yes Bank share price

Yes stock chart by TradingView

In my last article on Yes Bank, I cautioned that it had more downside after the lock-up expiry ended. This view was accurate as the stock plunged to 14.35 INR in March. On the daily chart, we see that the stock remains below the 50-day and 25-day moving averages. It is also below the key resistance point at 17.20 INR, the lowest point on December 23.

Therefore, I believe that there is more downside for the stock as sellers target the next key support at 14.35 INR, the lowest level this year.

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