ICICI Bank is India's largest private-sector insurance and asset-management company, and owns the largest market share in important consumer loan sectors, such as credit cards. But the bank seems to have suffered a major loss of confidence by customers that has led to persistent rumors about potential insolvency and repeated runs on the bank. ICICI customers apparently have long memories and can recall the bad old days when this bank's predecessor company almost went bust. Customer confidence is critical for a bank that draws a large part of its capital from customer deposits. Shares dropped 69% from Oct. 9, 2007, through Nov. 11.He doesn't recommend it, but says ICICI is among a group so stocks that will recover first post the bear market, though they will fade after that. He says this about "broken" stocks:
Famous but broken stocks move up like rockets when it first looks like the sector's fortunes have turned, as the July and August rally in financials showed. Bank of America, a classic famous but broken financial stock, climbed 68% from July 15 through Aug. 31, when it looked like the sector might be getting set to lead the whole market higher. The Dow Jones Industrial Average ($INDU) was up an impressive but still much smaller 5% in that month and a half.We've just seen a move from 320 to 450, and back down again. Was that the rise before the fall? Note: BAC is down 50% from it's August end highs, and back to the July lows.
Disclosure: no positions but I have ICICI in my Short Only strategy.
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