Curious case of Kotak Bank. What to do now? Investment is always a long term game. Even the best of the companies can have issues with governance, operations, supply chain and demand. We need patience, perseverance and persistency sometimes. Avoid being impulsive, hasty and emotional and impetuous in this journey to create generational wealth and achieve financial freedom.
With my limited knowledge I will try to give my honest assessment on the curious case of Kotak bank. Let us all try to arrive at our own logical conclusion without considering this article as a prophesy to buy or sell the stock.
My observations tell me and I might be wrong but it is obvious RBI does not have a problem with asset quality of Kotak bank. Neither is there any complex issue related to compliance and probably organizational ethics. NPAs will be known soon (3rd May Quarterly Result) but I assume with prejudice and bit of bias it will neither be a major issue.
Then what is the issue? It seems the issues are related to cyber security, data of clients and lethargy with compliances related to digital growth in foot print. Yes things might be pretty nasty here considering the wrath with which RBI came down on them.
So my logical assessment tells me that fundamentally it might not be a major worry. So there are further questions:
Will they have to spend a lot in cybersecurity etc?
Yes.
Can it effect top line growth?
Yes.
Can it hamper the growth of the bank for few quarter or more?
Yes.
Will I be selling the stock I hold?
Probably not unless they hit my predetermined stop loss.
Will I buy Kotak bank right now as it has fallen more than Rs.200 and is at mouthwatering levels?
No. Not right now.
Why not?
Because we do not catch a falling knife. We will catch the bouncing ball.
What does the chart of Kotak Mahindra Bank say?
The Zone between 1602 and 1534 has potential to provide a strong support. If 1534 is broken on weekly closing. We may see new multi-year lows of 1504 or even 1400 (As of now). 1640, 1672, 1700 and 1721 will be very tough resistances to cross. This is what my analysis of chart says. Do not take it as a buy or sell call. Take a wise descision before giving a knee jerk reaction and selling in hurry or panic. One good quarter and things can be back to normal. I personally hold Kotak bank currently in my portfolio. I may rethink my further call to action if 1534 or 1504 are broken as of now I might not sell this stock. I may add on bounce at an opportune time.
Disclaimer: Investment in stocks, derivatives and mutual funds is subject to market risks, please consult your investment advisor before taking financial decisions. The data provided above is for the purpose of analysis and is purely educational in nature. The names of the stocks or index levels of spot Nifty mentioned in the article are for the purpose of education and analysis only. Purpose of this article is educational. Please do not consider this as a recommendation of any sorts.
