Kotak Mahindra Bank has seen a sharp decline of 10% in its share price in early trading on Thursday. This plummet marks the largest single-day decline for the stock since March 23, 2020, as the Reserve Bank (RBI) intervened with regulatory measures, directing the private lender to halt the issuance of fresh credit cards and the onboarding of new clients through digital channels.
Analysts Weigh In Amidst Market Turmoil
Looking at the percentage, it should also be noted that most of the stock brokers still stand by their conviction towards Kotak Mahindra Bank, which could mean that this incident will not have much of an impact, at least initially. On the other hand, people remain concerned about the expected long-term impact of this directive if it continues for too long.
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Analysts have drawn parallels between Kotak Mahindra Bank’s current situation and the challenges already faced by HDFC Bank, India’s largest private lender. Similar issues at HDFC Bank took as long as nine to fifteen months to resolve, indicating a potentially longer recovery period for Kotak Mahindra Bank
RBI’s Directive Creates Ripple Effect
The RBI direction comes as part of its regulatory functions in response to concerns regarding compliance and risk management at Kotak Mahindra Bank. The move has created uncertainty among investors, leading to heavy selling of the bank’s shares.
Before the market opened, a major deal involving around 16.3 lakh shares of the lender took place, with the identities of the buyers and sellers remaining unknown. This mysterious transaction has increased apprehensions about the prospects of the bank.
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Market Capitalisation Takes a Hit
The sharp fall in Kotak Mahindra Bank’s shares has led to a huge loss in market capitalisation, with the bank incurring a loss of INR 30,000 Cr so far. The slump pushed the stock to a 52-week low on Thursday, which has a current market capitalization of INR 3.3 lakh Cr.
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