Until about a month ago, if you asked people what would be their number 1 index stock for 2019, the near consensus answer was ICICI Bank. Truth be told, this was a vanishingly rare instance where I thought the consensus had got it right. I also expected a big re-rating in ICICI Bank.

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However, the events of the last 10 days have put a spanner in the works. Now I worry that there could be something amiss that this market is sensing on ICICI Bank. And what does that mean for the Bank Nifty and the Nifty itself? Let’s look at the price pattern, which in most cases is enough to give you signals of what smart money might be doing.

It was somewhere in July last year when it became clear that former boss Chanda Kochhar’s position had become untenable that the stock started to rally from around Rs 260. By the time Kochhar’s exit was official, the stock had climbed to Rs 320. It didn’t stop there and continued to re-rate going up to as high as Rs 380 earlier in January. In this period, the stock went up 46 percent compared with a modest 4 percent move in the Bank Nifty.

It is then that something changed. The stock started to see big delivery selling. Between January 9 and 28, the stock fell from Rs 382 to Rs 343. It also saw consistent delivery selling of Rs 250-400 crore in this phase, the biggest being the Rs 700 crore number on January 28, with the knowledge that the results were round the corner and the market in general was very sanguine about results. Nobody believed there will be a shocker is the numbers to warrant the fall.

That point was corroborated when over the next two days, the stock had a sharp rally again to close at Rs 368 just ahead of results. The results looked good and next morning, taking cue from the ADR, the stock opened at Rs 372 and climbed to Rs 376, again getting very close to its highs. But then it fell with a thud, closing at Rs 364 and falling another 10 bucks next day. As I write this article, it continues to fall.

One explanation of the fall is that the CBI FIR mentions the current incumbent management of ICICI Bank along with Kochhar. Well, that explained the first round of fall. But what about this perplexing fall even after very strong numbers? Does the market know?

First Published:Feb 4, 2019 12:20 PM IST