Yesterday the stock of SKS Microfinance closed at Rs 956 down by more than 5 % after the company in a statement to the stock exchanges admitted that it’s revenues and bottom line could be affected in the coming months because of the reduction in interest rates announced by it and the hostile environment prevailing in some districts of Andhra Pradesh.This was the first time that the shares of SKS Microfinance closed below the issue price of Rs 985. On October 26th , the stock had fallen to an intra day low of Rs 894 on the NSE but had then recovered to eventually close at Rs 1,005.
Analysts attributed the the drop to the announcement from SKS Microfinance that despite getting approval from the Andhra Pradesh High Court to carry on it’s business, the company has not been able to hold village centre meetings in 54 per cent of the centres in Andhra Pradesh for the week ending October 29. SKS Microfinance has attributed this inability to hold centre meetings to lack of legal and political support in these areas.
Today the stock has dipped further by more than 3 % and was trading at Rs 926 at 3:00 PM IST on the National Stock Exchange. The average daily volumes traded on the stock exchanges have also decreased over the last few weeks indicating that day traders were no longer active in this counter. Many analysts are predicting that SKS Microfinance will not be able to regain it’s 52 week high anytime soon and could take many months or even years to go back to the 1400+ levels.
Investors and shareholders will also be keenly looking at SKS Microfinance’s Q3 results when the impact of rate cuts and the effects of the current micro finance crisis becomes more clear. While there is not enough data available for a thorough technical analysis of the stock , many analysts agree that the stock will test lower levels in the coming days.