Explained: The Fall of Vedanta’s Stock Price
Vedanta’s stock price has dropped significantly during the last four sessions. Vedanta’s stock price today began lower for the fourth day in a row, falling as low as 261.95 per share on the NSE, a 13.50% decrease. According to stock market experts, Vedanta shares are under pressure to sell off due to negative feelings around the company’s failed bid to purchase the state-owned Hindustan Zinc and the significant spike in the US currency, which caused the Vedanta bond yield to fall to “junk” levels.
They projected that Vedanta stocks would continue to fall since the metal stock gave out around 280 and now has support in the 240 to 230 level. Saurabh Jain, Vice President of Research at SMC Global Securities, outlined the basic reasons for the abrupt sale of Vedanta shares. “The market’s image of the firm was already negative after the Government of India (GoI) rejected Vedanta’s offer to buy the government part in Hindustan Zinc Ltd. for $2.98 billion.
After leading Vedanta bonds in the bad category, its bond yield fell by more than 30%. The corporation is currently in repayment problems due to the drop in Vedanta bond yields in overseas markets.” According to Saurabh Jain of SMC Global, Vedanta is also struggling with the burden of debt payments. At the conclusion of the second fiscal year (H2FY23), Vedanta Ltd. will owing $1.2 billion, $4.1 billion, $3.9 billion, and $4.7 billion, according to him.
The rapid increase in the US dollar rate in the forex market, according to Anuj Gupta, vice president of research at IIFL Securities, is the reason the Vedanta bond yield has plummeted. Given that it is projected that the US dollar will maintain its strength in the short term, Vedanta shares have given breakdown at 280 levels and may remain erratic for a few more days.
Vedanta’s share price could drop to a range between Rs. 240 and Rs. 230. As a result, it is advised for shareholders who already possess Vedanta shares to maintain their stop loss at about $230, while new shareholders are asked to think about other metal stocks such as Tata Steel or JSW Steel.
According to Anuj Gupta of IIFL Securities, as of December 31, 2022, about 99.99 percent of the promoters’ shares in Vedanta have been pledged. The company will therefore find it challenging to raise more capital to meet its anticipated short-term financial needs.
Tuesday morning trading saw a more than 2.50 percent decline in the share price of Hindustan Zinc. For the past two trading days, the stock price of the metal PSU has dropped by more than 6%.
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