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Bharat Fin's OI surges to all-time high over Q4 worries

With the stock now trading below 200-day moving average of Rs 771, analysts foresee further 5-6% fall in the near term.

, ET Bureau|
Updated: Apr 07, 2017, 11.35 AM IST
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“The next support is at Rs 720-730, where the stock should consolidate," said Nagaraj Shetti, HDFC Securities.
“The next support is at Rs 720-730, where the stock should consolidate," said Nagaraj Shetti, HDFC Securities.
MUMBAI: The outstanding positions in Bharat Financial's stock futures surged to an all-time high on Thursday as traders mounted bearish bets, fearing weak fourth quarter earnings and uncertainty over the impact of farm loan waiver in Uttar Pradesh on microfinance institutions. Moreover, lack of any announcement on the acquisition of the company , for merly known as SKS Microfinance, by a private bank , despite persistent rumours is also weighing on the stock, traders said.

Open interest in futures contracts of Bharat Financial surged 11% to an all-time high of 2.2 crore units on Thursday.

The stock fell 3.4% to an over two-month low of Rs 769.95 in the cash market. With the stock now trading below 200-day moving average of Rs 771, analysts foresee further 5-6% fall in the near term.

“Some more decline is likely .The next support is at Rs 720-730, where the stock should consolidate," said Nagaraj Shetti, technical research analyst at HDFC Securities.

For the year 2017, stock is up 31%, largely due to buzz of acquisition by a private lender.

Early in March, the company revealed the rising stress on its loan book. The company had said it had not received collections on loan of Rs 306 crore in the previous eight weeks due to demonetisation and electoral processes in some states.

“The company in a conference call recently said that they would see some asset quality write-downs, which could affect their fourth quarter earnings. Moreover, politics around farm loans is also weighing on the stock,“ said Subhranshu Mishra, research analyst-institutional equities, Anand Rathi.

The firm reported standalone net profit of Rs 143 crore in the December quarter. In March quarter last year, the company posted profit of Rs 84.5 crore.

Abhinesh Vijayraj, VP-Equity Research at Spark Capital Advisors said in the near term said loan waivers can affect microfinance institutions.

“The company has an exposure of about 8% of the loan book in UP. Near term delinquencies are likely as collection inefficiencies will take 6-8 months to normalise. Besides, there is an acquisition overhang as no announcement has come despite repeated rumours," said Abhinesh Vijayraj, VP-Equity Research at Spark Capital Advisors.

Of the 14 analysts tracking Bharat Financial, 9 have a 'buy' on the stock while others have a 'hold' or 'sell'.
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