Yes Bank stock zooms 29% after rumours that SBI will buy into it

• India's largest bank, the State Bank of India (SBI), has been told by the government to bail out Yes Bank, according to reports citing sources.
• While Yes Bank stock bounced back from a 52-week low, the burden of another wobbly bank weighed the shares of SBI down.
• “We may see a big spike in price of Yes Bank and negative reaction in price of SBI,” Abhimanyu Sofat, Head of Research, IIFL Securities.

Shares of Yes Bank on Thursday zoomed over 29 per cent in afternoon trade amid reports that the government has asked State Bank of India (SBI) to lead a consortium that will buy stake in the company. The scrip witnessed a sharp rise in afternoon trade, spiking 29.35 per cent to Rs 37.90 on the BSE. Earlier in the day, it had hit a 52-week low of Rs 28.05.

On the NSE, it jumped 29.18 per cent to Rs 37.85 erasing early losses.

The BSE has sought clarification from Yes Bank on Thursday with reference to news that government is said to have approved SBI's plan to buy stake in the company.

"As per media reports, SBI has been told to invest as a lead in a consortium in Yes Bank. Though we may see a big spike in price of Yes Bank and negative reaction in price of SBI, we recommend caution to retail investors," Abhimanyu Sofat, Head of Research, IIFL Securities.

The critical thing to watch would be percentage dilution of equity taking into consideration the conversion of existing bonds issued by Yes Bank into equity, he said.

SBI shares recovered from early losses and were trading over 3 per cent higher.

SEE ALSO:
RBI may have to bail out Yes Bank if it fails to raise $2 billion by March 14
Yes Bank under CEO Ravneet Gill⁠— eight months of wild mood swings