Unveiling Vedanta: Vedanta Shares Dive 9% to Trade Near One-Year Low Level on Stake Sale Report

Vedanta Shares Dive 9%

Vedanta shares fell sharply on Thursday, hitting a near one-year low after news that its top shareholder, Twin Star Holdings, would sell a 4.30% stake in the company.

The stock tumbled 8.96% to hit a day low of Rs 247.80, just 0.79% away from its 52-week low of Rs 245.85.

The stake sale is reportedly being done to repay debt of parent company Vedanta Resources. The shares under the stake sale were being offered at Rs 258.50 apiece.

Vedanta is yet to issue an official statement regarding the stake sale.

Unraveling the Stake Sale: A Strategic Move Amidst Challenging Times

This stake sale, orchestrated by Twin Star Holdings, is not merely an isolated event but a strategic maneuver aimed at addressing the debt concerns of Vedanta Resources, the parent company. The shares involved in this sale were priced at Rs 258.50 each, reflecting the intricate financial considerations underpinning this transaction. While Vedanta is yet to provide an official statement regarding the stake sale, analysts have begun to speculate on the potential implications.

Market Dynamics and Technical Insights: Analysts Weigh In

Analysts said the stake sale could weigh on the stock in the near term.

“The stock has broken out from the 3-month-old consolidation zone today on block deal news,” said Kush Ghodasara, CMT. “Technically, this downfall is with heavy volumes and indicators have turned bearish. All short-term moving averages have given bearish crossover. So, the stock will be weak in the near term. Stop loss would be placed at Rs 274.”

Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One, said, “Vedanta while being in a sideways trend on higher time frame charts, the daily charts of this steel major doesn’t paint a rosy picture as today’s gap down on the back of relatively higher volume adds to the bearish undertone. The stock trades below all its major EMA’s. As far as levels are concerned, the higher gap and breakdown zone of Rs 265-275 is likely to provide strong resistance to stock. On the flip side, the swing low of Rs 230-odd zone is expected to provide a cushion in a comparable period.”

“Vedanta is bearish on the daily charts with next strong support at Rs 250. A daily close below this support could lead to target of Rs 219 in the near term. Resistance will be at Rs 261.”

Anil Agarwal’s Vision: Navigating Challenges and Paving the Path Forward Of  Vedanta

Vedanta’s chairman, Anil Agarwal, has exhorted setting up a policy mechanism that promotes the participation of young entrepreneurs in the mining sector, particularly metals that are key to emerging technologies. The development of mines at scale will also help India cut down on its dependence on imports, he said.

“The technologies of the future, such as EVs, batteries, solar power, wind energy, etc., are highly mineral-intensive. They need large quantities of lithium, cobalt, rare earth, copper, and other minerals. India is 100% import-dependent for some of these minerals and more than 50% dependent on others. This is a big risk,” Agarwal said in a recent tweet. “Despite our superior geology, countries like China and Saudi Arabia are taking the lead through very liberal policies to attract investment and become major players in these new-age minerals,” he added.

Stressing the need to reduce the nation’s dependence on mineral imports, he further said, “In India, the key is to enable young entrepreneurs to undertake exploration and allow them to sell their discoveries to large mining companies, who will develop these discoveries into production.” Pointing out that liberalising and supporting exploration could be a game changer for startups, he said that this will help India be among the top three economies in the world. “Time is of essence,” he concluded.

Vedanta: A Glimpse into the Company’s Multifaceted Identity

Beyond the current market dynamics, Vedanta’s multifaceted identity unfolds, revealing its extensive operations across a spectrum of industries and geographies. As a subsidiary of Vedanta Resources Limited, the company’s reach extends across India, South Africa, Namibia, Liberia, the UAE, Korea, Taiwan, and Japan. Diving into its diverse portfolio, Vedanta is engaged in activities spanning Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, Nickel, Aluminium, Power, and Glass substrates. The company’s forward-looking approach is further underscored by its foray into semiconductors and display glass, underscoring its commitment to innovation and adaptation.

A Glimpse into the Historical Trajectory: Vedanta’s Share Price Journey

To contextualize the recent developments, a glance into Vedanta’s share price history offers valuable insights. Over the past 12 months, beginning from August 3, 2022, Vedanta’s stock has registered a modest rise of nearly two per cent. This trajectory stands in contrast to the broader market sentiment, with the Nifty 50 index having surged over 12 per cent during the same period. This historical perspective lends depth to the current market scenario, inviting further analysis into the factors influencing Vedanta’s performance.