After shares of private sector lender Yes Bank gained after the firm announced plans to consider fundraising later this week, stock market experts points out that the stock could move higher once the F&O ban is lifted tomorrow. Yes Bank share price gained more than 8.5% to hit the day’s high at Rs 68.85 on BSE. Explaining the rationale behind the stock’s jump today, Sanjiv Bhasin, Director at IIFL Securities said that due to the ban today, the shorts are trapped. “The long buyer maybe was aware of the corporate announcement today for a QIP and has made this position. Tomorrow you could see higher volatility and further short squeeze till 72 levels as positions can only be squared up,” Sanjiv Bhasin told in an interview to Financial Express Online.
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Explaining the process behind the F&O ban, technical analyst Milan Vaishnav said that this happens due to the security reaching the MWPL — Market Wide Position Limit. “Any trade that can now be placed in FO can be done only to square off the existing position. If any trade is done to take a fresh position, it would result in a penalty,” Milan Vaishnav, CMT, MSTA told Financial Express Online. According to Vaishnav, if a higher percentage of volumes correspond to delivery volumes, it implies that the market consensus is towards an upward directional bias. “So, if the up move in the price is also accompanied by higher delivery volumes, the stock may move higher once it is out of FO ban,” he explained.
In a statement to the exchanges, Yes Bank said that its board will meet on Friday to consider and approve raising funds by issue of equity or equity linked securities. However, the bank has not mentioned the intended figure that it looks to raise. Earlier this month, Yes Bank CEO Ravneet Gill told reporters that the private sector lender is aiming to finish a $1.2 billion equity raising exercise by December and willing to give new investors a board seat.
(Please consult your financial advisor before taking any investment related decision)