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Vedanta on verge of a breakdown, sell March futures for a target of Rs 126

Most of the metal counters are witnessing tremendous selling pressure and VEDL is underperforming the majority of its peers. It is trading on the verge of a fresh breakdown from the consolidation range, after spending nearly six months.

February 25, 2020 / 12:05 PM IST
 
 
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Ajit Mishra

Last week turned out to be a muted one, impacted by lackluster earnings and weak domestic macro data. Further, the concern over global economic growth slowdown due to coronavirus too impacted investors’ sentiments.

Indian benchmark indices remained highly volatile and ended the week on a negative note, following the global peers. Both Sensex and Nifty ended lower by 0.2 percent and 0.3 percent, respectively.

This week, participants will be eyeing the GDP estimates and India’s infrastructure output data on February 28. Besides, the first visit of the US President to India is also on their radar.

The movement of the benchmark index in the last two weeks shows indecisiveness among the participants. And, we expect volatility to remain high to the scheduled derivatives expiry of February month contracts.

Close

In the absence of any major event, global cues especially the news related to coronavirus will continue to dictate the market trend.

On the benchmark front, the Nifty has breached its 2-week long consolidation phase on the downside and now the next support is placed at 11,700.

In the case of any rebound, 11,950-12,050 zone would act as a hurdle. Since we’re seeing a mixed trend on the sectoral front, traders should largely focus on stock selection and risk management.

Here is a list of three stocks which could give 5-7% return in the next 3-4 weeks:

Mahanagar Gas: Buy| LTP: Rs 1101| Target: Rs 1,180| Stop-Loss: Rs 1,020| Upside 7%

MGL has been witnessing profit taking for the last three weeks or so, after a sharp rally from roughly Rs 750 to Rs 1240+ zone.

Considering its overall uptrend, we feel it’s a healthy correction and the stock is likely to find support around 1060 levels.

We thus advise traders not to miss this buying opportunity and accumulate fresh longs on dips within 1065-1075 levels.

Sun Pharmaceutical Industries: Sell March Futures| LTP: Rs 398| Target:  Rs 375| Stop-Loss: Rs 420| Downside 6%

Sun Pharma has been trading in a broader range of Rs 360-450 levels for the last nine months or so. It is gradually inching lower after retesting the upper band of late and indications are in the favor of further fall ahead.

The existence of a strong resistance zone of multiple moving averages ribbon around 420 level is added negative. Traders can consider fresh shorts in the mentioned zone of 403-406.

Vedanta: Sell March Futures| LTP: Rs 133| Target: Rs 126| Stop-Loss: Rs 140| Downside 5%

Most of the metal counters are witnessing tremendous selling pressure and VEDL is underperforming the majority of its peers. It is trading on the verge of a fresh breakdown from the consolidation range, after spending nearly six months.

The prevailing chart pattern and positioning of the indicators are also in sync with the negative view. We advise creating fresh shorts in the mentioned zone of 135-137.

(The author is VP Research, Religare Broking)

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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