YES-BANK: Part II. Cockroaches gone.

by | Feb 15, 2019 | Dear old dad | 0 comments

In early February 2019, YES BANK puts out a press release stating the company has received a notice of NIL divergence in NPA from RBI. Central banks all over the world do a periodic review of the asset quality of banks under their regulatory scope. Nil divergence simply means that the non-performing assets (NPA) reported by the bank does not diverge from what have been assessed as NPA by the banking regulator. Last cockroach gone, I say, loading up on the stock, wishing my trading account was larger. As it quickly jumps to 220 and hesitates, I also add 200-strike calls two months out at 30, thinking where is the time value. The next day, RBI raps Yes Bank on the knuckles for releasing this news which was supposed to be confidential, threatens to fine. (Apparently, this is the practice in India, some eager-beaver employee must have jumped the gun and put out the nil-divergence news on a Friday). I fret over the weekend, I have no clue what the market will do with this RBI news. However, the stock barely dips, in a few weeks, it is at 275, I dump the calls, very, very pleased with myself.  Earnings are quite a while away, late May.  I scan the analyst reports- they are not encouraging. The Nifty has had quite a run from its post-January dip. YES Bank is on the top of the list of monthly gainers. Still nobody is a believer. “They got a friendly report from RBI says one,” As Yes stalls in the 270s, perhaps it is time to go I tell myself.