Vedanta shares snap four-day losing streak; is the recovery temporary?

Shares of Vedanta Ltd snapped four sessions of losing streak today despite weak sentiment in the broader market.  Since August 1, the stock had lost 14%. The stock of the mining and metal major gained 2.5% intraday today to Rs 243.85 against the previous close of Rs 237.90 on BSE.  In the last two sessions, the stock hit a 52-week low for the second consecutive session post stake sale by a promoter entity last week. On August 3 when promoter Twin Star Holdings sold a part of its stake, the stock fell 8.96% to Rs 247.80, close to the 52-week low of Rs 245.85 hit on August 4, 2022.  In the next session on August 4, the stock hit a fresh 52-week low of Rs 245.55 on BSE. On August 7, the metal stock fell to a 52 week low of Rs 237.10.  

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In the current session, a total of 12.13 lakh shares of the firm changed hands amounting to a turnover of Rs 29.22 crore on BSE. Market cap of the firm rose to Rs 89,677 crore. 

In terms of technicals, the relative strength index (RSI) of Vedanta stands at 19.5, signaling the stock is trading in the oversold territory. The stock has a one-year beta of 1.2, indicating high volatility during the period. Vedanta shares are trading lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.  

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Shares of Anil Agarwal-led Vedanta have lost 21.83% this year and fallen 6.10% in a year.  

On August 3, Twin Star Holdings, the majority shareholder among Vedanta’s promoters, offloaded 15.4 crore shares or 4.14% stake in the company. The transaction was done at a weighted average price of Rs 258, a 5% discount to the closing price on August 2. Promoters held majority stake in Vedanta at 68% at the end of June quarter and Twinstar Holdings owned 46.4% stake.  

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Manoj Dalmia, CEO of Proficient Equities said, “Vedanta Ltd, a diversified natural resource group, holds a PEG valuation of 3.34, indicating potential overvaluation. Considering ongoing selling pressure, it’s advisable for investors to refrain from purchasing at current levels. An opportune accumulation point would be around Rs 207. For those seeking portfolio diversification with a long-term perspective, the stock could be considered due to its focus on the semiconductor sector. It is recommended to gather a small portion of the stock. Cautious investors might consider accumulating once bullish signals emerge, while the current reduction in metals demand makes the current time unfavorable for investment.” 

 Abhijeet from Tips2trades said, “Vedanta is bearish but also oversold on the daily charts with next support at 226.75. Investors should buy only if daily close is above the resistance of Rs 248.5." 

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher Pvt. Ltd said, “The stock has tanked in the last 4 sessions with heavy profit booking witnessed turning the trend negative and with support seen near  Rs 234-237 zone, needs to sustain that level failing which the matter turns further worse with next downside support visible near  Rs 215-206 levels. For the bias to improve to some extent, it needs to cross the Rs 254 zone decisively and expect for further upward move.” 

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Osho Krishan, senior Analyst - Technical & Derivative Research, Angel One said, "Vedanta has plummeted from the high of Rs 280 in the last couple of trading sessions and has disrupted the price structure on the daily chart. The fall in the counter has led it to the oversold region on the technical parameters; however, the support seems to be placed around 230 odd zone (previous swing lows). On the higher end, the bearish gap of Rs 261-270 (coinciding with 200 SMA) is likely to act as a sturdy hurdle in the comparable period." 

Vedanta reported a 40% fall in net profit to Rs 3308 crore in the first quarter. Revenue fell 13% to Rs 33,242 crore in Q1 from Rs 38,251 crore during Q1FY23 The company declared an interim dividend of Rs 18.5 per share.