Vedanta shares fall for fifth straight session; analysts expect more downside

Shares of Vedanta Ltd are in a short-term downtrend, falling in the last five sessions. The metal and mining major's stock is down 8% during the period. With the ongoing correction, Vedanta shares have turned oversold with a RSI of 26.8. A RSI below 30 indicates that a stock is oversold on charts. 

Vedanta shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages, indicating that the stock has been trading in the bearish zone. 

Meanwhile, profit booking in Vedanta stock comes after promoters diluting stake via large block deals (e.g., Twin Star Holdings selling an approximate 1.8% equity stake), and sectoral weakness in the broader metal industry.

In the current session, Vedanta shares slipped over 2% to Rs  251.50 against the previous close of Rs 257.90. Market cap of the firm fell to Rs 98,717 crore. 

The stock has risen 16% this year and gained 58% in a year. Vedanta shares have a one-year beta of 1.3, indicating very high volatility during the period. 

Virat Jagad, Sr. Technical Research Analyst at Bonanza said, "Vedanta has witnessed a sharp correction from its recent high and is currently testing the key 50% Fibonacci retracement level near 260, which is acting as an important support zone. The stock is trading below its short-term moving averages, while the RSI remains below 30, indicating oversold conditions that could lead to a technical pullback. However, the broader trend remains weak unless the stock reclaims higher levels. A sustained move above Rs 280 could trigger a recovery towards Rs 295– 313. On the downside, Rs 250 is immediate support, with Rs 236 as the next major support. Resistance lies between Rs 280 and Rs 313."

Shitij Gandhi, AVP - Equity Technical Research, SMC Global Securities said, "The neckline zone around Rs 265-267 is now expected to act as an immediate resistance, while a stronger resistance is placed near Rs 295-300, where previous price congestion exists. On the downside, the stock is approaching a crucial support zone around Rs 240-242, which coincides with the long-term moving average and could provide temporary stability. However, unless Vedanta reclaims the Rs 265-267 neckline convincingly, the broader technical outlook is likely to remain negative, with any pullback towards the resistance zone expected to attract fresh selling pressure rather than sustained buying interest."

Hitesh Tailor, Technical Research Analyst at Choice Broking said, "Currently trading around Rs 255, the stock is approaching a crucial Rs 250–240 support zone, which coincides with the previous demand area and is likely to act as an important base for the ongoing correction. A sustained breach below this zone could extend the decline towards lower levels. On the upside, immediate resistance is placed at Rs 280, followed by a stronger hurdle around Rs 305–310. Unless Vedanta reclaims and sustains above Rs 280, the broader outlook is likely to remain corrective with a cautious bias."