Fear dominates these stocks, how much can they possibly fall?

Published November 23, 2018

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The market showed a small loss Thursday, and Nifty 50 (NIFTY) ended the day at 10527 points, which is a decline of 0.69 per cent. Markets are still clueless of the direction, facing resistance around 10800-10850 levels but still holding ground above 10450 points.

However, there are three Nifty 50 stocks that have been battered so hard that they have touched their 52 week low. NTPC, for which I wrote an analysis on Wednesday, and the other two are VEDL and COALINDIA. Where are these stocks heading and what could be the possible support, if any is found in the near term future?

Coal India Limited (COALINDIA.NS) Close: 256.65

For over six months, the Coal India Limited share price was trading in a sideways trend between the resistance around 300 rupees and support around 260 rupees in the medium term. In the longer and shorter term charts, the stock is inside a downward channel.

The stock has now broken down through the support from the rectangle formation. A sell signal has been initiated and a target price of around 230 from the formation may be seen in the coming weeks or months. In case of a price reaction, a stop loss should be maintained if it closes above its resistane of 275 rupees. As seen in the candlestick chart, there is a gap also at the same level, which according to theory may work as potential resistance.

Volume has previously been low at price tops and high at price bottoms. This is indicated by the negative volume balance. Additionally, the momentum in the stock is falling and weak. The stock is overall assessed as technically negative for the short to medium term.

Investtech's outlook (one to six months): Negative

Vedanta Ltd (VEDL.NS) Close: 199.60

The metal and mining giant Vedanta Ltd is in a falling trend channel in all the time frames, short, medium and long term. This shows that investors over time have sold at lower prices to get out of the stock, and indicates negative development for the company.

In the longer term chart, the stock had given a sell signal from a double top formation. The target from the formation has been achieved but the formation indicated continued decline in price until reversed.

The stock had tested resistance around the 242 area, but failed to cross that level. Price reverted back and has now broken the earlier support level at 202 rupees. This may initiate fresh selling in the stock. In the past few days, the stock has fallen on higher volume, which indicates that the sellers have been more aggressive than the buyers.

The stock does not show any clear support either in the medium or in the longer term chart. So the potential downside can be huge. On price reversal, there is resistance between 204-209 levels and then at 230 rupees.

Investtech's outlook (one to six months): Negative

The analyses are based on closing price as per November 22, 2018. Maintaining proper stop loss is always recommended.