IndusInd Bank Stock Crash — Check SEBI Rules On F&O Price Band Revision
IndusInd Bank's stock has plunged by more than 25%, leading to a market capitalisation wipeout of around Rs 18,000 crore.
Shares of IndusInd Bank Ltd. crashed on the exchanges on Tuesday, in the trading session that followed the disclosure made by the private lender regarding the accounting discrepancy in its forex derivatives portfolio. The rapid slide in the scrip was recorded along with multiple revisions in the stock's lower price band filters.
The stock has plunged nearly 26%, leading to a market capitalisation wipeout of more than Rs 18,000 crore.
The bank had, after the market hours on Monday, said it identified accounting discrepancies of 2.35% of its net worth as of December 2024 in its derivatives portfolio during an internal review. The lender has appointed PwC to independently review and validate the findings.
This will have an approximate one-time impact of Rs 2,100 crore due to the derivatives discrepancies, the bank's management said in an analyst call.
The development dampened investor sentiment around the stock, with the scrip continuously plunging in the trading session so far on Tuesday. The shares were locked in the lower circuit twice within the first hour of trading, but the slide continued with every further revision in the price bands.
Here's a look at the Securities and Exchange Board of India's rules on revision of price band filters.
In cash market and futures contracts, the session starts with a price band of 10% of the last closing price. The same can be flexed subsequently a number of times, subject to cooling period restrictions.
For the first two instances of flexing, the price band could be flexed by 5% of the previous day's closing price after the cooling off period. This cooling off period would be 15 minutes.
For subsequent two instances of flexing, price band would be flexed by 3% of the last closing price after "the cooling off period of 30 minutes", as per SEBI's rules.
For subsequent instances of flexing, price band would be flexed by 2% of the previous day's close after the cooling off period of 60 minutes.
Shares of IndusInd Bank were down 25.8% at Rs 669.3 apiece on the BSE at 1:01 pm, compared to 0.21% slide in the benchmark Sensex.
On a 12-month basis, the scrip is down by around 56%. The stock's relative strength index stood at 29.64.
Twenty-four out of 48 analysts tracking IndusInd Bank have a 'buy' rating on the stock, 17 recommend a 'hold' and seven suggest a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 60.6%.
