Technical Analysis

Vedanta moves in a sideways manner

Yoganand D | Updated on March 11, 2018 Published on March 11, 2018
This is the highest ever dividend paid by Vedanta in a financial year.

This is the highest ever dividend paid by Vedanta in a financial year.   -  REUTERS

The long-term uptrend will be in place as long as the stock trades above the support ₹200 and ₹210

Here are answers to readers’ queries on the performance of their stock holdings.

What are the medium-term prospects for Vedanta and Hindustan Zinc?

Wasudeo Pat

Vedanta (₹303.5): The stock of Vedanta has been in a long-term uptrend since taking support at ₹58 in February 2016. However, it encountered a key long-term resistance in the ₹340 and ₹350 band and is consolidating in a broad range between ₹280 and ₹350. This resistance band capped the stock's rally in late February.

Subsequently, the stock changed direction and began to decline. Last week, it tumbled 6 per cent, breaching the long-term uptrend line as well as an immediate support at ₹320. Moreover, the indicators in the weekly and monthly charts are displaying weakness, backing the stock’s trend reversal. Therefore, investors can consider taking partial profits off the table at this juncture.

A fall below the immediate support level of ₹300 can pull the stock down to the lower boundary of the sideways range at ₹280. Further fall below this base level will mitigate the medium-term uptrend and drag the stock down to ₹250 over the medium term.

That said, the long-term uptrend will remain in place as long as the stock trades above the significant support range of ₹200 and ₹210. Investors with a long-term perspective can stay invested as long as the stock trades above this support zone with a stop-loss at ₹190. If the key support at ₹280 cushions the stock, it can retain the sideways range for some more time. A decisive rally above ₹320 can take the stock higher to test the upper end of the range. But an emphatic breakthrough of ₹350 is needed to strengthen the bullish momentum and take the stock northwards to ₹380 and ₹410 over the long term.

Hindustan Zinc (₹314.1): Since encountering a key barrier at ₹330 in October 2017, the stock of Hindustan Zinc has been in a broad sideways move between ₹285 and ₹330. In late February, the stock tested the upper boundary at ₹330 and recorded a new high at ₹339. But the stock began to decline thereafter, triggered by weakness in the weekly and monthly indicators. It now tests near-term support at ₹310.

A plunge below this base can pull the stock down to ₹300 and then to ₹285 in the short to medium term. Further slump below the lower boundary at ₹285 will alter the sideways movement and drag the stock down to ₹270 and ₹260 over the medium term.

A break below ₹260 will strengthen the downtrend and pull the stock down to ₹240 and 230. The long-term uptrend will remain in place as long as the stock trades above a key support level of ₹210. Investors can hold the stock with a stop-loss at ₹200. A conclusive rally above ₹330 can take the stock higher to ₹350 and ₹370.

What are the prospects for Vascon Engineers?

P k Mahapatra

Vascon Engineers (₹34.4): The stock of Vascon Engineers met with key resistance at ₹52 in late December 2017 and started to decline. Since then, it has been in a medium-term downtrend. Short-term trend is also down. Last week, the stock tumbled 8 per cent, breaching a key support at ₹37.

Nevertheless, it has an immediate support at ₹32, which can provide some cushion in the near term. An upward reversal can keep the stock in the wide range between ₹32 and ₹40 for a while. That said, if the stock plunges below ₹32, the downtrend will strengthen and pull the stock lower to ₹30 and then to ₹26 in the medium term. Key resistances above ₹40 are at ₹45 and ₹50. Avoid taking positions in this stock.

Send your queries to techtrail@thehindu.co.in

Published on March 11, 2018
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