Au Small Finance Bank Jumps 14 per cent, here's why and key triggers to watch out for!

This approval removes a key overhang and as a result, the stock has jumped nearly 14 per cent in the first trading hour of the session on Thursday.

The Indian markets have been on a roller coaster ride, extending gains for eight straight days on Wednesday, only to trade on a tepid note on Thursday, amid not so encouraging cues from the US markets. However, amidst this volatility, there has been stock-specific action on D-Street and one stock that has taken the center stage is Au Small Finance Bank.  

The stock was under pressure lately due to the uncertainty lingering about management continuity, as well as the uncertain macro environment. However, after the RBI approved the re-appointment of Mr. Sanjay Agarwal as MD & CEO of the bank for a period of three years, effective April 19, 2023, the stock has seen a strong up-move. Similarly, it has approved the re-appointment of Mr. Uttam Tibrewal as the Whole Time Director of AUBANK for a period of three years, effective April 19, 2023.  

This approval removes a key overhang and as a result, the stock has jumped nearly 14 per cent in the first trading hour of the session on Thursday. Going forward, the focus will shift to the fundamental performance of the bank, which will determine whether the stock can sustain its upward momentum.  

Interestingly, with the strong up-move on Thursday, the stock has logged a fresh 4-month high and volumes have been humongous thus far. It has been the highest single-day volume since May last year. This indicates that market participants have been eagerly waiting for a positive trigger for the stock.  

Further triggers for the stock would be to look forward to the RBI approval on the bank's AD-1 banking application and progress on the universal banking license, which the bank is now likely to apply for as per one of the leading brokerage houses in India.  

In conclusion, the approval of the re-appointment of the MD & CEO and the Whole Time Director of Au Small Finance Bank by the RBI removes a key overhang for the stock. Going forward, the focus will shift to the fundamental performance of the bank, which will determine whether the stock can sustain its upward momentum. The bank's progress on its AD-1 banking application and universal banking license will be key triggers to watch out for in the future.