Why is Bandhan Bank falling/rising?

Persistent Underperformance Against Benchmarks

Bandhan Bank's recent price movement is part of a longer-term trend of underperformance relative to the Sensex. Over the past week, the stock has declined by 2.88%, significantly lagging the Sensex's modest 0.59% gain. This negative momentum extends over one month, with the bank's shares falling 6.76% while the Sensex advanced by 1.34%. Year-to-date figures further highlight the disparity, as Bandhan Bank's stock is down 7.67% compared to the Sensex's robust 8.92% rise.

Looking at a broader horizon, the stock has declined 16.21% over the last year, whereas the Sensex has appreciated by 5.27%. The three-year and five-year returns paint an even starker picture, with Bandhan Bank losing 38.86% and 60.99% respectively, while the Sensex gained 35.37% and 90.68% over the same periods. These figures underscore a sustained period of underperformance that has weighed heavily on investor sentiment.

Technical Weakness and Trading Patterns

On the day in question, Bandhan Bank's shares underperformed its sector by 2.82%, continuing a two-day losing streak that has seen the stock fall 2.33%. Intraday trading revealed a low of ₹145.85, representing a 2.6% decline from previous levels. Notably, the weighted average price indicates that a larger volume of shares traded closer to the day's low, signalling selling pressure.

Technical indicators further highlight the stock's frailty. Bandhan Bank is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This alignment of moving averages below the current price is typically interpreted as a bearish signal, suggesting that the stock is in a downtrend and may face resistance to upward price movement in the near term.

Despite the decline, investor participation has increased markedly. Delivery volume on 02 Dec surged to 1.3 crore shares, a 404.06% rise compared to the five-day average delivery volume. This heightened activity could indicate that investors are either offloading positions amid weakness or repositioning in anticipation of future developments. The stock's liquidity remains adequate, with a trade size capacity of approximately ₹2.42 crore based on 2% of the five-day average traded value, ensuring that market participants can transact without significant price disruption.

Investor Sentiment and Market Context

The absence of positive dashboard data or notable catalysts suggests that the recent decline is driven primarily by technical factors and broader market sentiment rather than company-specific news. The stock's consistent underperformance relative to the Sensex and its sector indicates that investors may be cautious about Bandhan Bank's near-term prospects.

Moreover, the stock's failure to hold above key moving averages may deter momentum investors and traders who rely on technical signals. The increased delivery volume could reflect a mix of profit-taking and repositioning, but without accompanying positive fundamentals or sector tailwinds, the downward pressure is likely to persist.

Conclusion: A Challenging Outlook Amid Technical and Relative Weakness

In summary, Bandhan Bank's share price decline on 03-Dec is a continuation of a prolonged period of underperformance relative to the broader market and its sector peers. The stock's technical positioning below all major moving averages, combined with increased trading volume near intraday lows, signals persistent selling pressure. While liquidity remains sufficient for active trading, the lack of positive catalysts and ongoing negative momentum suggest that investors remain cautious.

For market participants, these factors highlight the importance of closely monitoring technical levels and relative performance before considering new positions in Bandhan Bank. Given the availability of alternative investment opportunities with stronger recent performance, some investors may prefer to explore other options to optimise their portfolios.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →