Top/Down Take: Yes Bank

First, let's start at the asset class level with the Nifty 500 which is the broadest measure of India's stock market we have. Prices have recovered well off their March lows and are above support near 8,400, so the long-term trend is sideways and the short-term and intermediate-term trends remain higher.

Click on chart to enlarge view. 

Drilling down into the sector/industry that Yes Bank belongs to, we see a tepid bounce off the March lows and prices stuck below former support at 13,300. From an industry group perspective, it appears that the Nifty Private Bank Index remains in a downtrend over the long-term and is sideways over the short/intermediate-term.

Here's a view of the Nifty Private Bank Index relative to the Nifty 100 testing a key support level near 1.04. The ratio is testing its March lows as momentum diverges positively. The fact that prices cannot rally from here despite these conditions is a testament to its relative weakness.

So let's review. The asset class is in an uptrend, but the Nifty Private Bank Index is suggesting the industry remains in a longer-term downtrend on an absolute and relative basis. That's our backdrop as we move into the analysis of Yes Bank.

Here's Yes Bank's weekly chart on an absolute basis. Prices are retesting a major support level near 11.00 once again, with momentum diverging.

From a structural perspective, if the stock was going to catch a bid and begin forming a longer-term bottom, this would be a very logical level for that process to start. What's clear is we cannot be short if prices are above 11.00 because there's upside risk towards 45-50 if this stock really gets going. We also don't want to be short because the asset class is in an uptrend, making it hard for shorts on an absolute basis to perform.

And here's the stock relative to its industry, the Nifty Private Bank Index. Prices recently made all-time lows and quickly recovered as momentum diverged. Could this be the bottom? Sure, but that thesis could only be intact if prices are above 0.0011 on a weekly closing basis.

And here's the stock relative to the rest of the Small-Cap market-cap segment sitting at all-time lows as momentum diverges positively. Prices could get going to the upside if they manage to close back above their March lows of 0.0030, but again, that would only suggest a counter-trend move and not a long-term bottom.

To conclude, it appears that our view from back in March hasn't changed all that much...the best trade is likely no trade here.

Equities as an asset class are in an upward trend, but Yes Bank is in an underperforming industry and is an underperformer within that industry and market-cap segment. We don't want to be bottom-fishing losing stocks, especially when there are so many others working.

If you're so inclined to own it, the stock needs to stay above 11.00 on a weekly closing basis, or the risk and opportunity cost of owning the stock even more elevated than they currently are.

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Thanks for reading and please let us know if you have any questions!

Allstarcharts Team