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Vedanta, part of the diversified metals sector, rose over 50 per cent in the last year compared to over 14 per cent upside seen in Nifty50 but technicals suggest some consolidation at higher levels.

The stock with a market capitalization of over Rs 1.5 lakh cr hit a 52-week high of Rs 440 on 11 April on the BSE and since then the trend went sideways.

After a sharp run-up, the metal space has witnessed a trend reversal, and stocks from this sector have been witnessing price-wise correction over the last few days.

Vedanta is engaged in the exploration, production, and sale of zinc, lead, silver, copper, aluminium, iron ore, and oil & gas.

The stock hit a low of Rs 390 earlier in May before bouncing back. The stock briefly breached its 50-DMA placed at Rs 397.90 but reclaimed towards the close of the day on 5 May.

The stock is trading below most of its crucial short-term moving averages such as 5,10,20, and 26-DMAs which suggests pressure at higher levels.

Experts are of the view that the stock breached the neckline of the Head & Shoulder pattern which was formed in the last one-month period on daily charts. A break below the neckline suggests that there could be more downside.


“The price action on the daily chart of Vedanta in last few days has led to the formation of a ‘Head and Shoulders’ pattern,” Ruchit Jain, Lead Research, 5paisa.com, said.

“This pattern, which is formed after a significant uptrend indicates a change in short term trend and hence, we expect some price correction in the stock in near term,” he added.

Traders can look to sell Vedanta Futures in the range of Rs. 397-400 for potential targets of Rs. 383 and Rs. 374 in next few days, added Jain. The stop loss for short positions can be placed above Rs. 410.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)


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