Yes Bank share price crossed key support level: Buy the dip?

Yes Bank (NSE: YESBANK) share price crashed to the lowest level since July 2022 in an important day for the company. It nosedived to a low of 14.45 INR and then pared back some of those losses to close at 15.65 INR. The stock has crashed by over 36% from its highest level in 2022, meaning that it is in a bear market.

Shockwaves in the banking sector

Monday was an important day for Yes Bank, the mid-size Indian banking company. It marked three years since the Reserve Bank of India (RBI) asked several Indian banks to invest in the company to prevent its failure from having contagion in the market.

The top banks that invested in Yes Bank were State Bank of India (SBI), HDFC, Axis Bank, and Kotak Mahindra among others. These banks agreed to a three-year lock-up period, that prevented them from selling their stock. 

Therefore, this lock-up period ended on Monday, meaning that some of these companies will now want to offload their stakes. Besides, they have all made money from the investment, with the Yes Bank share price being about 60% above where it was when they invested in it.

In most periods, stocks tend to decline ahead and after a lock-up expiry. This also explains why the stock has moved into a bear market in the past few weeks. 

At the same time, the stock crashed as concerns about the global banking sector continued. Most banks have retreated in the past few days following the collapse of Silicon Valley Bank (SVB) and First Republic Bank (FRB).

Most bank stocks have plunged in the past few days. As I noted earlier on in this article, Deutsche Bank and Commerzbank, were the worst performers in the DAX index. European banks like Societe Generale, Santander, and Lloyds Bank have also retreated.

Yes Bank share price forecast

YES stock chart by TradingView

The daily chart shows that the Yes Bank stock price crashed below a key level. It moved below the crucial support at 16.70 INR, which was the 200-day exponential moving averages (EMA).  The stock also retreated below the key support level at 15.30 INR, the lowest point on September 29 and August 12.

Therefore, I suspect that the stock will soon have a death cross, which happens when the 200-day and 50-day moving averages make a crossover. As such, the shares will likely continue retreating with the next key level to watch being at 10 INR.