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The stock of Vedanta tumbled 5 per cent accompanied by above average volume on Monday, decisively breaking below the key support level of ₹160. Investors with a short-term view can sell the stock at current levels as the near-term outlook has turned bearish.
The stock has been in a medium-term downtrend trend since encountering a key resistance at ₹190 in early April 2019. Within this downtrend, the stock was on a sideways movement in the band between ₹160 and ₹175 over the past two months. The recent downward breakthrough of the sideways movement has strengthened the medium-term downtrend. Moreover, the stock has conclusive breached its 21- and 50-day moving averages and trades well below these moving averages.
The daily relative strength index has entered the bearish zone from the neutral region and the weekly RSI has also entered the bearish zone backing the downtrend. Further, the daily as well as weekly price rate of change indicator are hovering in the negative territory indicating selling interest. There has been an increase in daily volume over the past two sessions.
The stock can extend the downtrend and reach the price targets of ₹149.5 and ₹146.5 in the coming trading sessions. Traders can sell with a stop-loss at ₹159.
( Note : The recommendations are based on technical analysis. There is a risk of loss in trading.)
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