Indian Bank shares slump 12% in two days; technical analysts suggest 'bearish' trend

Shares of Indian Bank extended their fall for the second straight session in Thursday's trade. The stock tanked 8.25 per cent to hit a day low of Rs 393.55. At this price, the scrip has plunged 11.95 per cent in just two days. Despite the mentioned fall, it has gained nearly 37 per cent on a year-to-date (YTD) basis and 44 per cent in the past six months.

Recently, the state-owned bank's committee of directors on capital raising has approved the issue and allotment of more than 10 crore new equity shares of face value Rs 10 each to eligible Qualified Institutional Buyers at an issue price of Rs 394 per equity share aggregating to Rs 3,999 crore. The Qualified Institution Placement (QIP) issue opened on December 12 and closed on December 15.

Pursuant to the allotment of equity shares in the QIP, the paid-up equity share capital of the bank increased to Rs 1,346.9 crore, comprising over 134 crore equity shares of face value Rs 10, the lender informed exchanges.

On technical setup, analysts largely suggested that the stock looked 'bearish'. Support on the counter could be seen around Rs 390 level. A drop below the mentioned support zone may lead to a further decline.

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "Support will be at Rs 390 and resistance at Rs 440. Expected trading range will be between Rs 370 and Rs 460 for a month."

AR Ramachandran from Tips2trades said, "Indian Bank is bearish on daily charts with strong resistance at Rs 459. A daily close below support of Rs 391 could lead to target of Rs 336 in the near term."

DRS Finvest founder Ravi Singh, "The stock is looking weak and may see lower levels of Rs 390. Those holding should keep a stop loss placed at Rs 418."

The counter was trading lower than the 5-day, 10-, 20-, 30-, 50- and 100-day simple moving averages (SMAs) but higher than the 150-day and 200-day SMAs. The counter's 14-day relative strength index (RSI) came at 41.56. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 8.84 against a price-to-book (P/B) value of 1.12.

(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)

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