In a seesaw market on Tuesday, the share price of Vedanta (NS:VDAN) seems to be preparing for either a reversal or a large breakout. First, talking about the company, it is a natural resources company with a market capitalization of INR 1,75,651 crore, making it the 53rd largest NSE-listed company.
It is one of the best-performing stocks in the large-cap space this year, delivering a massive return of 135%. Looking at its financial health score of 4 out of 5, the confidence in a further upside potential increases significantly.
Image Source: InvestingPro+
This score checks over 100 parameters rating each one of them out of 5. Then a cumulative rating is derived after taking the mean of all which finally determines whether it is a portfolio stock or not. A score of 3 or above (the higher the better) is what makes an investment less risky.
The main highlight is the technical resistance at which it it trading. The stock has a strong selling zone at around INR 475 - 470. There has been a couple of instances when the stock reversed its direction from this hurdle, which further increases the importance of this zone.
Today, the stock is trading 3.5% up at INR 468.8, by 1:13 PM IST, which is quite close to the hurdle. Now, if the stock again takes a U-turn, traders can get a very good risk-to-reward trade by selling from the very top end. If the breakout happens this time, then positional traders can accumulate this counter as the next target would then be INR 560 - 570.
This might look like quite a larger rally, but here I am considering a time frame of roughly 2-3 months.
Read More: This is How You Find Winning Stocks with Ease
X (formerly, Twitter) - Aayush Khanna
LinkedIn - Aayush Khanna