1 week ago
Vedanta Group Stocks Extend Losses Amid Market Concerns
Several Vedanta Group companies saw their share prices fall on Tuesday and Wednesday.
The group stocks had already dropped on Tuesday, and some continued falling on Wednesday.
Vedanta Power, Vedanta Iron & Steel and Sterlite Technologies were among the weaker shares.
Hindustan Zinc and Vedanta Aluminium Metal moved higher on Wednesday, even though they had fallen the previous day.
An analyst said investors were worried about weaker global commodity prices and had begun selling shares after a strong rally.
Vedanta is connected to commodities such as aluminium, zinc, lead, silver, oil and gas.
Higher oil prices, a weaker Indian rupee and high US bond yields also made investors more cautious.
The analyst said the decline did not show a major deterioration in Vedanta's businesses.
However, continued weakness in metals, high oil prices and elevated interest rates could keep pressure on the shares.
Vedanta Group stocks fell for a second session, with declines of up to 5% during Wednesday trading.
Vedanta Power and Vedanta Iron & Steel fell up to 2% on Wednesday after losing up to 4.9% on Tuesday.
Sterlite Technologies hit its 5% lower circuit for the second consecutive session.
Vedanta Oil & Gas traded 0.2% lower, while the flagship Vedanta stock was down 0.7% on Wednesday.
Analyst Seema Srivastava attributed the selling mainly to commodity weakness, profit booking and risk aversion rather than company-specific problems.
- Who
- Vedanta Group companies, including Vedanta Power, Vedanta Iron & Steel, Sterlite Technologies, Vedanta Oil & Gas, Hindustan Zinc and Vedanta Aluminium Metal, were affected.
- What
- Vedanta Group stocks extended losses for a second session, with shares declining by up to 5% during intraday trading.
- Where
- The trading took place in Indian equity markets.
- When
- The declines occurred on Tuesday, September 15, and Wednesday, September 16.
- Why
- The selling was linked to global commodity weakness, profit booking, broader risk aversion, rupee weakness, foreign-investor risk reduction and concerns about high oil prices and US Treasury yields.
Short-Term Selling Case
Long-Term Business Case
Reason for the share-price decline
Short-Term Selling Case
Weak global commodity prices, profit booking and broader risk aversion were driving the correction.
Long-Term Business Case
The decline was not viewed as evidence of significant company-specific deterioration in Vedanta's businesses.
Near-term outlook
Short-Term Selling Case
Continued weakness in metals, crude prices above $100 and elevated US bond yields could keep pressure on the shares.
Long-Term Business Case
The long-term investment case remains supported by commodity prices, strong cash generation, deleveraging and potential value unlocking after the demerger.
Key facts
- Two-day trend
- Vedanta Group stocks extended losses for a second consecutive session on Wednesday.
- Tuesday's largest declines
- Vedanta Iron & Steel and Vedanta Power fell up to 4.9%, while Vedanta Oil & Gas fell 4.3%.
- Wednesday trading
- Vedanta Power and Vedanta Iron & Steel fell up to 2%; the flagship Vedanta stock was down 0.7%.
- Sterlite Technologies
- The stock hit a 5% lower circuit for the second straight session.
- Stocks moving higher
- Hindustan Zinc and Vedanta Aluminium Metal were trading more than 1% higher on Wednesday.
- Commodity exposure
- Vedanta has exposure to aluminium, zinc, lead, silver and oil and gas.
- Macro pressures
- Brent crude traded around $107, the rupee was near ₹95–96 per US dollar, and the US 10-year Treasury yield moved above 5%.
Quotes
Seema Srivastava
Senior Research Analyst at SMC Global Securities
“today's decline should not be interpreted as a fundamental deterioration in Vedanta's business. The group's long-term investment case remains linked to commodity prices, strong cash generation, deleveraging and the value-unlocking potential following the demerger.”
livemint.com
“Any correction in metal prices can therefore trigger disproportionate selling in high-beta stocks such as Vedanta.”
livemint.com
Sources
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