Vedanta shares rally 39% in a month. Should you ride the momentum?

"The stock has skyrocketed and hovers way above all its significant EMAs on the daily time frame. From a technical standpoint, the momentum persists in the counter, but one must adopt a pragmatic approach and keep trailing stop losses to higher zones as it continues its northward march," said Osho Krishan, Senior analyst, technical & derivatives, Angel One.

For now, Krishan suggests that the Rs 390-380 subzone is likely to cushion any blips, while strong support lies around the Rs 365 zone (20-DEMA) and a breach below the same could only pause momentum in the counter.

Last week, the company also posted Q4 results where Vedanta reported a net profit of Rs 1,369 crore, down over 27% (YoY) compared to Rs 1,881 crore reported in the year-ago period, while the consolidated revenue from operations was also down by 6% YoY at Rs 34,937 crore.

Sanjiv Bhasin also bets on Vedanta as one of the cheapest commodity stocks, which could double investors’ money. “If you have a vision of doubling your money in the next year, I think it will be Vedanta once the six companies demerge. You will have to take in light that, yes, there is a debt element which has always been a sore spot, but you cannot expand the way has over the years till you do not have some debt on the books,” quoted Bashin of IIFL Securities.

Despite a decline in Q4 profit and revenue, investors remain bullish on Vedanta. Various brokerages like Nuvama, CLSA, and Citi Group recently increased their target price for the stock going up to Rs 542.

Vedanta Chairman Anil Agarwal emphasised that they are going strong in their business, and plan to invest $20 billion across sectors in four years focusing on technology, electronics, and glass businesses apart from the existing business activities.

The businessman’s commentary came in as a strong sign for the street when he mentioned that the company hardly has any debt component while also dismissing the need to divest its steel business. Additionally, he stated that the group is bullish on its non-core steel business as they are India’s lowest-cost producer.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)