Vedanta, Cairn India stage smart recovery on value buying after recent slump

Shares of two of the Anil Agarwal-controlled firms Vedanta Ltd and Cairn India put up a strong show on the bourses after facing a bear onslaught in the previous four trading sessions amid value buying in these counters.

At 3 pm, shares of metal and mining major Vedanta shot up 5.4 percent to Rs 146.40 on strong volumes of 7.2 lakh shares traded on BSE.

Similarly, oil exploration firm Cairn India gained 2.3 percent to Rs 169 a share on volumes of 1.6 lakh shares traded so far.

Both the stocks were under pressure in the last few sessions, with Vedanta witnessing a steep fall following a major correction in the Chinese equity markets earlier this week which subsequently led to fall in commodity prices.

In the last four trading sessions, Vedanta stock tanked 19 percent on worries a fall in global commodity prices could hurt the company’s business sentiment. Also, analysts are apprehensive about the company’s planned merger with Cairn India given the sharp erosion in the company’s equity value compared with Cairn India.

“If commodity prices remain weak or move further South, Vedanta’s value would drop more sharply than Cairn’s, which could prompt minority shareholders of Cairn to vote against the merger,” Motilal Oswal Securities said in its report.

On the other hand, Cairn India shares were down 10 percent in last four sessions as the persisting weakness in global crude oil prices will continue to hurt the company’s earnings in the near-to-medium term, says analysts.