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Company Profile
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Vedanta Resources Plc mines and processes metals. The Company mines copper, aluminium, and zinc in India and Australia and operates refineries and smelters.
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Vedanta Resources, VED (Candle, Monthly)
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This report will follow Vedanta Resources, which is in the FTSE 350 Basic Resources Sector. All of our Technical Analysis reports will follow the format of starting at the monthly graph, then moving down to the weekly graph, and only then down to the daily outlook.
The long term chart shows how Vedanta has more closely matched the moves of the FTSE 100 than other stocks in the Basic Resources sector. Although unlike the FTSE it did manage to post higher highs in 2010, posting a full 100% retracement of the 2007-2008 losses. However over the past 18 months the stock has traded off this high, and back into the retracement channel, grey lines.
In the past couple of months it has even managed to break under the 38.2% retracement line, so the expectation is that it may yet move back to the 2008 lows in the coming months.
Leaving an underweight stance, against both its sector and the FTSE 100.
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Vedanta Resources, VED (OHLC, Weekly)
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On the long term chart you could see some buyers tempted in, after the recent losses, and on potential support from the long term moving average, but the medium term chart suggests investors should hold off on buying for now, waiting for confirmation.
The stock has set up a dead cross, negative moving average crossover, orange and grey lines, and has breached the 38.2% retracement level, and has posted a medium term bearish trend while having a falling RSI. So a pretty broad sweep of negativity.
As on a number of stocks there is the suggestion of a potential RSI Failure Swing where the RSI suggests that the bearish trend in the momentum may have turned. The active investors could use this as an argument to buy here, with stops under the recent lows offering decent risk reward.
But this certainly is a 'trade' rather than an 'investment' as the medium term outlook remains troubling, it is just that the risk/reward on the Failure Swing trade is favourable. Leaving a negative outlook overall, underweight, but that the more active could start to consider adding to positions here, with a break above the 38.2% line needed to confirm.
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Vedanta Resources, VED (Candle, Daily)
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| Charts courtesy of Updata |
The daily chart shows us the trading range the stock has set up in recent weeks, blue lines. We can see how over this period the FTSE has posted gains, highlighting how the stock has underperformed.
The stock has attempted to rally off the recent lows, but already looks to be turning over, the risk/reward on shorts here is not favourable leaving more of a take short term profits stance, looking to buy on any weakness to the 900 area, as long as this key support holds. Moves above the upper blue line are needed to turn more optimistic for the medium term.
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FTSE 350 Basic Resources Sector Constituents
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Code
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Sector %
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FTSE 100
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| Rio Tinto PLC | RIO | 26.56 | Y |
| BHP Billiton PLC | BLT | 21.73 | Y |
| Anglo American PLC | AAL | 16.05 | Y |
| Xstrata PLC | XTA | 11.53 | Y |
| Randgold Resources Ltd | RRS | 3.44 | Y |
| Antofagasta PLC | ANTO | 2.47 | Y |
| Johnson Matthey PLC | JMAT | 2.05 | Y |
| Fresnillo PLC | FRES | 2.05 | Y |
| Glencore International PLC | GLEN | 1.87 | Y |
| Eurasian Natural Resources Corp PLC | ENRC | 1.35 | Y |
| Croda International PLC | CRDA | 1.22 |
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| Lonmin PLC | LMI | 1.11 | Y |
| Kazakhmys PLC | KAZ | 1.05 | Y |
| Mondi PLC | MNDI | 0.88 |
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| Vedanta Resources PLC | VED | 0.86 | Y |
| Petropavlovsk PLC | POG | 0.73 |
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| Centamin Egypt Ltd | CEY | 0.61 |
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| Victrex PLC | VCT | 0.53 |
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| Kenmare Resources PLC | KMR | 0.5 |
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| Aquarius Platinum Ltd | AQP | 0.41 |
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| Hochschild Mining PLC | HOC | 0.39 |
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| African Barrick Gold PLC | ABG | 0.35 |
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| Elementis PLC | ELM | 0.33 |
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| Ferrexpo PLC | FXPO | 0.29 |
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| New World Resources PLC | NWR | 0.28 |
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| AZ Electronic Materials SA | AZEM | 0.23 |
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| Yule Catto & Co PLC | YULC | 0.22 |
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| Talvivaara Mining Co PLC | TALV | 0.22 |
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| Allied Gold Mining PLC | ALD | 0.16 |
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| Anglo Pacific Group PLC | APF | 0.16 |
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| Gem Diamonds Ltd | GEMD | 0.16 |
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| Carclo PLC | CAR | 0.09 |
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| UK Coal PLC | UKC | 0.05 |
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| International Ferro Metals Ltd | IFL | 0.04 |
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| Anglesey Mining | AYM | 0.02 |
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| Namakwa Diamonds Ltd | NAD | 0.01 |
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Sector information compiled from Bloomberg – November 2011
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