Why Vedanta share price is nosediving — explained
- Vedanta share price today gave breakdown at ₹280 in early morning deal
Vedanta share price has been nosediving for last four straight sessions. Vedanta share price today opened lower on fourth day in a row and hit intraday low of ₹261.95 apiece on NSE, logging around 13.50 per cent dip in this time. According to stock market experts, Vedanta shares are under sell off pressure due to negative sentiments after the road block in its acquisition of state-owned Hindustan Zinc and sharp rise in US dollar that led to depreciation of Vedanta bond yield to 'junk' levels. They said that Vedanta stocks may continue to go downwards as the metal stock has given breakdown at ₹280 and now it has support placed at ₹240 to ₹230 zone.
Speaking on the fundamental reasons that led to sharp selling in Vedanta shares, Saurabh Jain, Vice President — Research at SMC Global Securities said, "Market mood was already negative in regard to Vedanta after the Government of India (GoI) opposing the Vedanta offer to acquire government stake in Hindustan Zinc Ltd for $2.98 billion. Then after, its bond yield has depreciated to the tune of more than 30 per cent that had led Vedanta bonds in junk category. So, the company is facing repayment crisis due to fall in Vedanta bond yield in global markets."
Saurabh Jain of SMC Global went on to add that Vedanta is facing debt repayment challenge as well. He said that Vedanta Ltd has to pay $1.2 billion due by H2FY23, $4.1 billion due by FY24, $3.9 billion due by FY25 and $4.7 billion due by FY26.
On why Vedanta bond yield has gone down, Anuj Gupta, Vice President — Research at IIFL Securities said, "Due to steep rise in US dollar rate in forex market, Vedanta bond yield has gone down. On chart pattern, Vedanta shares have given breakdown at ₹280 levels and it may continue to remain under sell off heat for few more sessions as US dollar is expected to remain strong in near term. We may see Vedanta share price to come down to the tune of ₹240 to ₹230 apiece zone. Hence, those who have Vedanta shares in their stock portfolio, they are advised to maintain stop loss below ₹230 whereas fresh investors are advised to look at other metal stocks like Tata Steel or JSW Steel. "
Anuj Gupta of IIFL Securities went on to add that as of 31st December 2022, around 99.99 per cent of promoters' share in Vedanta has been pledged and hence it is a big challenge for the company to generate an additional money to meet its financial requirement arising in near future.
Hindustan Zinc share price has also descended more than 2.50 per cent in early morning deals on Tuesday. The metal PSU stock has slipped over 6 per cent in last two trade sessions.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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