By- Pradeep Saran
Oct 2, 2024
Vedanta shares have been making waves in the stock market, delivering a remarkable 130% return over the past year. Supported by strong fundamentals and favorable economic measures, the stock has recently broken key resistance levels, making it a hot pick among investors. But the question remains—will Vedanta ride the ongoing metal sector rally for further gains?
Vedanta’s Impressive Rally: What’s Driving It?
In the last six months alone, Vedanta’s stock has soared by 88%, doubling its value since the start of the year. The stock, which had been trading between ₹405 and ₹480, broke past the crucial resistance level of ₹507 on September 27, 2024, signaling a strong bullish trend.
One of the key factors behind Vedanta’s rise is the rally in the metal sector, driven by economic stimulus measures from China, the world’s largest consumer of metals. The Chinese Central Bank recently announced plans to cut borrowing costs and inject liquidity into the economy, sparking a surge in commodity prices, including metals.
China’s Economic Stimulus Boosts Metal Stocks
China’s decision to lower reserve requirement ratios (RRR) by 50 basis points and cut interest rates on outstanding mortgages has provided a much-needed boost to the metal sector. These measures are expected to stimulate economic activity, driving demand for commodities and benefiting companies like Vedanta, which has significant exposure to metals.
Technical Breakout Signals Further Gains
Technically, Vedanta has experienced a rectangle consolidation breakout on the daily charts, backed by increased trading volumes. After a four-month period of consolidation, the stock has surged in line with the broader metal sector. Vedanta is currently trading above its short-term and medium-term moving averages, a strong indicator of a continued upward trend.
Expert Predictions: What’s Next for Vedanta?
According to Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research at SBI Securities, the momentum indicator RSI suggests that Vedanta’s uptrend could continue as long as it holds above ₹495. Shah predicts that the stock could rise further, potentially reaching ₹545-₹560 in the near term.
Amol Athawale, VP of Technical Research at Kotak Securities, echoes this sentiment, stating that ₹490 will act as a key support level. As long as the stock stays above this threshold, it is likely to maintain its bullish trend, with a potential upside of ₹530-₹550.
✓ Vedanta Limited (VEDL) Share Price Target
Conclusion: Will Vedanta Continue to Climb?
With strong fundamentals, technical indicators, and positive external factors like China’s economic stimulus, Vedanta seems well-positioned for further growth. However, investors should keep an eye on key support levels, as a dip below ₹490 could make the uptrend vulnerable. As of Monday, Vedanta closed at ₹512.55 on the BSE, leaving room for potential gains.
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