Allahabad Bank share price plunges 10%, set to remain bearish due to Bhushan Power fraud case, say stock market experts
Allahabad Bank share price has crashed around 10 per cent in the intraday trade after the bank officials reported the Bhushan Power & Steel Ltd fraud of Rs 1,774.82 crore.
Allahabad Bank share price has crashed around 10 per cent in intraday trade today after the bank officials reported the Bhushan Power & Steel Ltd fraud worth Rs 1,774.82 crore. The PSU bank was trading at Rs 42.50 per stock at 1:21 PM on NSE during Monday intraday trade. Reporting about the Punjab National Bank kind of fraud on Saturday, the Allahabad Bank informed the stock exchanges that Bhushan Power & Steel Ltd (BPSL) has defrauded the bank to the tune of Rs 1,774.82 crore, which led to the tanking of Allahabad Bank share price when the market opened on Monday, say stock market experts. They are of the opinion that the current sentiments of the banking stock are expected to continue and hence it would be better if the investors adopt 'sell on rise' strategy in regard to the Allahabad Bank stocks.
Speaking on the Allahabad Bank share price outlook Simi Bhaumik, a SEBI registered technical equity expert said, "The Allahabad Bank share price is technically weak in a short-term perspective and it may go down up to Rs38 per stock levels. So, any rise in the stock should be taken as a selling opportunity by the stock market investors." She said that the Allahabad stock has strong resistance at Rs 50 per stock levels hence if the PSU bank shares register any rally then an investor can sell the counter at around Rs 46-47 per stock levels maintaining the stop loss at around Rs 50 levels.
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However, Prakash Pandey, Head of Research at Fairwealth Securities was of the opinion that the Allahabad Bank's fundamentals are quite strong and after reaching at around Rs 37-38 levels, it may recover the lost ground at the Dalal Street in short-term perspective citing, "Allahabad Bank has done nothing wrong in this entire Bhushan Power & Steel episode. Bhushan Power & Steel defrauded with so many banks and Allahabad Bank is one of them. In fact, today's tank in the stock is mainly caused by the DHFL crisis that hasn't allowed the Bank Nifty index to recover since the market opened today." Prakash Pandey said that 'sell on rise' is possible only when the stock rises from current levels. Prakash Pandey went on to add that the Bhushan Power & Steel fraud has already been in the public domain for the last one and half years and its provisioning has already been done by the bank.
"In my opinion, people should be ready to take a position if the counter rises from current levels. However, there are chances that it may further correct to Rs 36-37 levels. So, if the counter sustains below Rs 40 per stock levels, a stock market investor can buy the counter below Rs 40 and book profit at around Rs 47 per stock levels maintaining stop-loss at Rs 35 per Allahabad bank counter," said Pandey.
"On the basis of forensic audit investigation findings and CBI filing FIR, on suo moto basis, against the Company and its Directors, alleging diversion of funds from banking system by the Bank's borrower, namely Bhushan Power & Steel Ltd (BPSL), a fraud of Rs 1,774.82 crore has been reported by the Bank to the Reserve Bank of India," the Allahabad Bank had informed stock exchange on Saturday.
The Allahabad Bank fraud came to light within a week of another public sector bank, PNB, reporting that it has been cheated by Bhushan Power worth Rs 3,805.15 crore by BPSL.