Moneycontrol
Apr 18, 2017 09:53 PM IST | Source: Moneycontrol.com

PSU banks, United Breweries in focus on Wednesday after Mallya bail

The market could not factor in Vijay Mallya's bail, which was granted a couple of hours after he was arrested by Scotland Yard's extradition unit in London.

 
 
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United Breweries, United Spirits slipped while PSU banks rallied in closing trade on Tuesday after media channels flashed reports of the arrest of liquor baron Vijay Mallya in London.

Vijay Mallya holds 7.9 percent stake of 52.84 lakh shares in United Breweries and about 12,510 shares in United Spirits as per the latest shareholding pattern. United Spirits closed 2.07 percent lower at Rs 1885.10 on the NSE while United Breweries plunged 2.5 percent to Rs 731.75.

Reacting to the news of the arrest, shares of PSU Banks such as State Bank of India, Bank of India, Bank of Baroda, and Canara Bank closed in green at a time when benchmark indices closed in the red.

However, the market could not factor in Mallya's bail, which was granted a couple of hours after he was arrested by Scotland Yard's extradition unit in London.

“If the prosecution starts in London, there won’t be any delay with respect to decision making. Hence, United Breweries and United Spirits will be in focus along with lender to Vijay Mallya,” AK Prabhakar, Head -Research at IDBI Capital told Moneycontrol.

PSU banks who have given loans to Vijay Mallya are trying to recover some of the huge loan amount by auctioning his properties in the country. Mallya owes nearly Rs.7,000 crore (excluding taxes) and nearly Rs 9,000 crore (including interest) to 17 Indian banks.

Seventeen banks which have lent money to Vijay Mallya include names like SBI (Rs 1600 crore), followed by PNB (Rs 800 crore), IDBI Bank (Rs 800 crore), Bank of India (Rs 650 crore) etc among others. The consortium of lenders is led by State Bank of India.

Lenders to Mallya decided to dispose of the Goa property for a little over Rs 73 crore earlier in the month, according to multiple media reports. The lenders seized the posh Goa villa after Mallya failed to repay loans taken for the erstwhile Kingfisher Airlines.

Technical Take: 

United Spirits: 

The stock has been making the lower top-lower bottom from the last nine weeks and has now corrected from Rs 2,427 to the Rs 1,830 mark. It is now trading near to 61.80 percent retracement of Rs 1850 of the upswing on the monthly chart.

“The immediate support is near Rs 1775 and below that fresh selling pressure could be seen while on the upside needs to hold above Rs 2,030 to get a bounce back relief rally towards Rs 2,200 zones,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

United Breweries: 

UBL is also making the lower top and lower bottom and has next support placed at Rs 690 and below that pace of selling could accelerate to Rs 650 zones.

The stock is respecting to its falling supply trendline by connecting tops of 977 and 845. “As long as United Breweries remains below this supply trend line on the weekly chart, the trend may remain week,” said Taparia. “A hold above 770 only can change its price pattern to get stability,” he said.
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