Kotak Mahindra Bank has fallen by more than 10%, when will it bounce?

As we all know that RBI has put restriction on Kotak Mahindra bank with respect to its online capabilities and its efficiency to offer credit card, post that we saw a sharp fall in Kotak Mahindra bank share price.

Lot of investors who had recently purchased Kotak Mahindra bank stock because of the price action that the stock was showing and the result is also due so in line with some expectation of positive result, people were making positions on Kotak Mahindra bank stock. There were also lot of people who had made some heavy position on the upside in the future segment, as we all know the future segment offer lot of margin that enables the traders to make heavy positions.

More than 10% in percent fall was a big setback for the people who made these recent positions specially for the people who made position in the future segment towards the upside. Now as far as the long-term investors are concerned, they are not much worried and the people have already cut their position by taking some loss want to forget that incidents but there are some people who are still carrying their position. They are wondering when Kotak Mahindra bank will revive will the upcoming result show some positive sentiments in the stock price.

When we look at some of the data points, company market size is more than three lakhs crore. It is a Big leading banks in India and there are lot of people who make banking sector exposure in only top 4 to 5 banks in India and Kotak Mahindra bank feature in that list. As far as the earning part is concerned Kotak Mahindra bank has shown strong EPS growth of 22% YOY with the EPS stand at around 87.7 if we see the PE ratio, it stands at around 18.33, which against the sector PE of 21.95 still suggest that there is a headspace in Kotak Myntra bank stock price.

The big question is that when would Kotak Mahindra Bank stock price starts showing some kind of confidence all over again, well the answer to this question lies into two big factors. Number one how soon Kotak Mahindra Bank works on the gap that RBI has suggested hence it can go back to RBI and say that we have fixed all the problem areas and you can again resume our 100% operations. Second, the upcoming result for Kotak bank can also set the mood, though the first point currently is the most critical but on a longer horizon the upcoming result is also quite important because in this negative environment if the result will not come as per expectation, it can further put pressure on the stock price.

One should now wait for the Kotak bank quick action on the RBI highlighted points, I believe safe would be is that one should not try to catch the bottom because we don’t know or anybody else would not know that what is the bottom, we are not suggesting that the bottom is extremely deep. One should definitely wait and watch how Kotak Mahindra Bank quickly come up with some resolution and after that we can definitely evaluate how are the recent results come up that can give us more confidence while making any position in Kotak Mahindra Bank.