IndusInd Bank’s share price witnessed a sharp decline, plunging 19.21% to Rs 725 on Tuesday morning (March 11) after the lender identified discrepancies in its derivatives portfolio. This sharp fall erased a significant portion of the bank’s market value, creating fresh concerns among investors.
Stock Hits Lower Circuit Amid Heavy Selling
The stock price of IndusInd Bank hit the 15% lower circuit early in the trading session, touching a fresh 52-week low of Rs 720.50 on the BSE. At 9:56 AM, the share price stood at Rs 725, down 19.21%. The bank’s market capitalization dropped to Rs 59,640 crore as panic-selling gripped investors following reports of a 2.35% impact on the lender’s net worth due to accounting discrepancies.
Derivative Portfolio Discrepancies Erode Investor Confidence
The steep fall in IndusInd Bank shares followed its disclosure on March 10 regarding anomalies in its derivatives portfolio. The bank’s internal review identified discrepancies amounting to 2.35% of its net worth as of December 2024, which translates to an estimated financial hit of Rs 1,530 crore.
Experts have raised concerns about the bank’s internal control mechanisms. Analysts from Macquarie noted that this issue “raises questions on internal processes,” while Jefferies pointed out that it “clearly reflects weak internal controls.” The Reserve Bank of India (RBI) is reportedly monitoring the situation closely.
Market Reaction and Technical Indicators
In the previous trading session, IndusInd Bank shares had already declined 4% to close at Rs 900, with heavy volumes being recorded. Over the last 12 months, the stock has plunged 42%, with a 5.6% decline year-to-date. Technical indicators suggest the stock is in oversold territory, with the Relative Strength Index (RSI) at 27.8.
Leadership Concerns Add to Investor Worries
Adding to the uncertainty, the RBI recently approved the reappointment of Sumant Kathpalia as the Managing Director & CEO for only one year, against the board’s recommendation of three years. This move has raised investor concerns about leadership stability within the bank.
Outlook for IndusInd Bank Shares
While the bank has appointed an external agency to independently verify its internal findings, investor sentiment remains weak. Analysts believe that the bank’s profitability and capital adequacy are strong enough to absorb the one-time impact, but the erosion of investor trust could continue to weigh on the stock in the near term.