Vedanta shares tumble 4% even after S&P upgrades Vedanta Resources; what should investors make of it?

Shares of metal majors Vedanta and Hindustan Zinc fell up to 4 per cent on Friday as investors booked profits in non-ferrous metal stocks following a sharp rally that pushed metal indices to record highs earlier in the session.

Vedanta shares declined 4.1 per cent to Rs 325 against the previous close of Rs 338.90. The stock had gained over the last four sessions after the government raised import duties on precious metals such as gold and silver to 15 per cent from 9 per cent.

Vedanta is the parent company of Hindustan Zinc, India’s largest primary silver producer, and positive developments in silver prices and the broader precious metals space have historically supported sentiment around the stock.

Metal indices hit record highs

The BSE Metal index surged to a record high of 44,569 in early trade before trimming gains to trade 158 points lower at 44,104. Similarly, the Nifty Metal index touched an all-time high of 13,628 before slipping 78 points to 13,483.

The pullback in leading metal counters came amid broad-based profit-booking after a sustained rally in the sector.

Vedanta remains in oversold territory

Despite Friday’s decline, Vedanta shares have rallied 105 per cent over the past year and gained 109 per cent in the last two years.

Technically, the stock’s relative strength index (RSI) stood at 28.8, indicating that it is trading in the oversold zone.

Vedanta shares are currently trading below their 20-day, 30-day, 50-day, 100-day, 150-day and 200-day moving averages, though they remain above the 5-day and 10-day averages.

A total of 17.89 lakh shares changed hands on the BSE, with turnover amounting to Rs 58.91 crore. The company’s market capitalisation slipped to Rs 1.28 lakh crore.

Hindustan Zinc shares decline

Shares of Hindustan Zinc also fell 3.75 per cent to Rs 644.15 from the previous close of Rs 669.10. The stock had gained in the previous three sessions amid optimism around silver prices and the company’s strong positioning in the segment.

Hindustan Zinc manufactures refined silver with a purity of at least 99.9 per cent, primarily sourced from the Sindesar Khurd mine in Rajasthan.

Unlike Vedanta, Hindustan Zinc continues to trade above its 5-day, 10-day, 20-day, 30-day, 50-day, 100-day and 200-day moving averages, indicating continued long-term strength.

The stock has gained 47 per cent over the last one year and surged 109 per cent over three years. Around 1.56 lakh shares changed hands during the session, generating turnover of Rs 10.14 crore. The company’s market capitalisation stood at Rs 12.17 lakh crore.

S&P upgrades Vedanta Resources rating

In a key development for the group, S&P Global Ratings upgraded London-based Vedanta Resources Ltd to ‘BB’ from ‘B+’, citing improved financial flexibility, stronger cost structures and continued deleveraging following the group’s demerger.

The agency also upgraded the company’s senior unsecured notes to ‘BB-’ from ‘B’.

S&P said the rating action reflects Vedanta’s improving earnings profile, proactive refinancing efforts and stronger liquidity position. The agency highlighted the ramp-up of the Lanjigarh alumina refinery in Odisha, which is expected to increase captive alumina coverage to more than 75 per cent of internal requirements next fiscal, up from around 60 per cent in FY26.

The expanded backward integration is expected to lower aluminium production costs by nearly USD 50 per tonne and structurally improve margins over the next 12–18 months.

S&P also noted that Vedanta Resources has strengthened its liquidity profile with over USD 2 billion in long-term banking lines, more than USD 3.5 billion raised through bond markets since late 2024, and cash and cash equivalents exceeding USD 3 billion.