RBL Bank shares rose as much as 4 percent on Tuesday on buying at lower levels and the lender's agreement with Bajaj Finance for the extension of the partnership of co-branded credit cards. The stock, however, soon pared most of the initial gains.
RBL Bank shares were trading 0.3 percent higher at Rs 141.25 on BSE, at 9:24 am. The gain comes after two days of consecutive fall. Year-to-Date, the stock is down 38 percent.
The lender's agreement with Bajaj Finance extends their partnership of co-branded credit cards for 5 years.
The stock fell sharply on Monday as negative developments -- Vishwavir Ahuja exiting as MD and CEO and RBI appointing Chief General Manager Yogesh K Dayal as an additional director on RBL Bank's board -- and a sombre brokerage commentary weighed on investor sentiment. The stock crashed over 23 percent on Monday.
Brokerages said that the central bank appointing an additional director to RBL Bank's board was a negative and that in the past, such an action by the RBI has usually come when banks have been in trouble.
CLSA said that the move will lead to uncertainty in the near term while ICICI Securities downgraded its rating on the banking stock to 'sell' from 'hold', considering the looming uncertainty.
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Antique Stock Broking said that the current development raises the risk of unknown.
"However, rationale of these unexpected developments are not very clear to us and could shake investor's confidence and lead to price correction and under-performance in the near term," Antique Stock Broking said in a research note.
Even as the bank's management highlighted that the appointment of the independent director by RBI is not due to any asset or liability related problems, analysts are skeptical about the same.
Edelweiss Broking believes that the transition to a new CEO could likely alter the growth trajectory and asset mix of the bank.
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