Fear factor rises on D-St: 302 stocks hit 52-week lows

Despite the key benchmark indices ending in the green, about 302 stocks hit a 52-week low on Thursday.

Among the notable ones that hit their yearly lows include YES Bank, Apollo Tyres, Arvind Fashion, Bharat Forge, Mahindra & Mahindra, Cadila Healthcare. The market breadth was negative.

Strong buying across sectors, led by media, metal, realty and energy counters, helped Sensex and Nifty close with gains, amid weak global cues over US-China trade war and uncertainty on the election outcome.

Interestingly, the two other barometers, the BSE MidCap index and BSE SmallCap index rose 0.27% and 0.25% respectively, though underperformed the Sensex.

S&P BSE Sensex ended the day 278.60 points, or 0.75% higher at 37393.48 points, while Nifty gained 100.10 points, or 0.90%, to close at 11257.10 points.

Standard Chartered in its market note said the key benchmark indices ended higher on Thursday, tracking positive global cues after US President Donald Trump decided to delay imposing tariffs on car imports from EU. US Treasury Secretary is likely to travel to Beijing soon to continue negotiations with Chinese counterparts.

Shares of private lender YES Bank continued to remain under selling pressure as the stock hit a three-year low of Rs 135 per share, falling 6.18% intra-day on BSE. The shares ended at Rs 137.80 per share, 4.07% below the previous low.

The share price of YES Bank has fallen 13% in the past two trading sessions after the Reserve Bank of India (RBI) appointed former deputy governor R Gandhi as an additional director on the Board of the private lender for two years. The bank's share price has fallen 43% since April 26 after it posted a net loss of Rs 1506 crore in the March quarter.

Australian brokerage Macquarie in its report said that even in the past RBI had appointed additional directors to the Board of banks like Dhanlaxmi Bank and Lakshmi Vilas Bank as both the banks have performed poorly and are in a beleaguered state.

"Many investors fear that there could be more skeletons in the closet for YES Bank due to which RBI has taken this action. In our view, while there are problems in the bank and balance-sheet looks stressed with the capital position being weak, the move by RBI could be a precautionary move as YES Bank is much larger than banks like Dhanlaxmi or LVB, and any failure here could have serious systemic implications. Hence, RBI could be cautious and pre-emptive here. Also, the problems in Dhanlaxmi and LVB were far more serious and RBI, in our view, appointed directors a bit late, whereas in YES Bank they want their director to be on the Board before the situation goes out of control," the report said.

The report said capital-raising is a 'must' for the bank.

"With CET1 at 8.4% and more write-offs looming, the bank desperately needs capital, otherwise problems could compound further. We aren't sure the investor appetite is strong enough, which makes capital-raising an enormous challenge. The only way out could be a PE investor bailing them out and getting a Board seat in return," the report said.

On the other hand, shares of Tata Global Beverages and Tata Chemicals rose 10.99% and 8.29%, respectively, after Tata Sons on Wednesday announced the merger of branded foods business of both the companies, which will create a Rs 9,000 crore FMCG giant.