Vedanta shares down 45% in three months: Good time to buy?

Shares of Vedanta have tumbled 45 per cent from their 52-week high amid highly volatile domestic market affected by negative global cues. A fall in global metal prices and rising inflation has also impacted sentiment around metal stocks, including Vedanta.  

The stock of Anil Agarwal-led firm, which hit a 52-week high of Rs 440.75 on April 11, 2022 is currently trading at Rs 239.05, translating into a decline of 45 per cent in over three months.

On April 28 this year, Vedanta's net profit fell 10 per cent to Rs 5,799 crore from Rs 6,432 crpre in the corresponding quarter of last fiscal.  

 However, revenue from operations rose to Rs 39,342 crore, jumping 41.14 per ent from Rs 27,874 crore in the year ago quarter.

Also read: JPMorgan sees 121% upside in Vedanta stock, here's why

The earnings were below market expectations, which dented sentiment around the stock. Since then, the stock has seen erosion in value amid highly volatile market.  

On the global level, US Fed raising rates, Russia-Ukraine war, high inflation, and resurgence of Covid-19 cases across the world, especially in China have kept investors in India on the edge and thereby impacted all sectors including metals.  

 Meanwhile, Vedanta stock touched an intraday high of Rs 240.35 against the previous close of Rs 237.40 on BSE today. It also touched an intraday low of Rs 235.95 on BSE.

The stock is trading higher than the 5-day and 20-day moving averages but lower than 50-day, 100-day and 200-day moving averages.  

ALSO READ:Vedanta, Hindalco among 16 firms issued show cause notices for not ensuring timely coal production

Total 2.63 lakh shares of the firm changed hands amounting to a turnover of Rs 6.27 crore on BSE. The market cap of the firm stood at Rs 88,841 crore on BSE.

The stock has lost 9.74 per cent in a year and fallen 29.9 per cent in 2022. In a month, the stock is down 9.31 per cent.  

Here's a look at what analysts said on the outlook of the stock.

Tirthankar Das, Head of Technical Research, Ashika  

"Prices of Vedanta Ltd are seen rebounding after grounding a base formation at 61.8% retracement of Apr'20-Apr'22 up move (60-440) indicating a fresh entry opportunity with a favorable risk reward scenario at the current juncture. The stock has halted the slide of FY22 at 205 (coinciding with the 200 WMA) and though it is yet to form a higher high and higher low on the weekly time frame, sentiments are turning in favor of the bulls. On the oscillator front, the daily 14 periods RSI is in a rising trajectory followed by a Class B bullish divergences where the oscillator is tracing a higher second bottom. The downward trending supply line since May'22 provokes an elevated resistance at 245-248, hence a sustained close above it might change the short-term trend from neutral to positive and can test the support turn resistance level May'22 at 300 in the near term. However, a trade below Rs 200- Rs 205 may alter the present setup and would continue to trade negatively."

 Mohit Nigam, Head - PMS, Hem Securities

"Over the last couple of months, metal prices have witnessed a substantial correction due to Covid-led clampdown in China. Both ferrous and non-ferrous prices have witnessed a steep decline from their recent highs due to recession fears, a downturn in the global economy, and a resurgence of Covid cases.

Finally, recent interest rate hike cycle and soared inflation have temporarily dampened the bullish sentiment on commodity stocks which might result in near-term stock price volatility and investors should be careful in trading in commodity stocks."

Manoj Dalmia, founder and director, Proficient Equities  

"Vedanta stock was under selling pressure in the last 3 months, due to a fall in commodity prices, increasing inflation downgrading the stock. The stock is currently consolidating at about Rs 220-230 range. We expect some short moves till Rs 266 levels. Investors are recommended to avoid heavy buying in the current scenarios although can be accumulated for long term."

 Ravi Singhal, Vice Chairman, GCL Securities  

"As we can see, after the delisting failed, the stock market rallied continuously and provided handsome returns, but this was before the interest rate hike scenario initiated by the world's central banks. Metal and crude prices are falling; they have dropped by more than 25%, which is affecting stock prices. As well, the world economy has a chance of entering a partial recession in the future. So there, is still some downside in the stock, but on dips it is advisable to invest for the long term at Rs 200 to Rs 220, with a stop loss of Rs 170."

Ravi Singh, vice President and head of Research, Share India  

"Vedanta share is under selling pressure after the subdued March quarter financial numbers. Also, the firm invited expression of Interest (EoI) for its Tuticorin-based smelter, which has been shut since mid-2018, following a Tamil Nadu government order, which triggered another leg of fall. However, the company is seeking shareholder approval for related-party transactions worth Rs 8,661 crore for the ongoing financial year (FY23) and is expecting to bring into operation two coal blocks this fiscal year. That's why we have seen some short coverings at current levels in Vedanta stock and this pullback may take the stock to touch the levels of Rs 240 - Rs 245 in coming days."