As PSBs put Voda Idea loan on hold, will the stock drop below Rs 10?

Technical outlook on Vodafone Idea: The stock is trading with a weak bias below its 200-DMA after a gap of 14 months; it needs to break above Rs 15.40 for the sentiment to revive, suggests chart.

Vodafone Idea stock is on investor’s radar amid reports that public sector banks (PSBs) are hesitant to provide fresh lending to the cash-strapped telecom firm. 

According to a Business Standard report, PSB officials cited Vodafone Idea's liabilities and lack of a clear capital expenditure plan as a key hindrance. India's third largest telecom player was seeking up to Rs 35,000 crore loan from banks. 

Recently, foreign brokerage Goldman Sachs flagged a 'Sell' call on Voda Idea with a base case target of Rs 2.5. Goldman said the company's recent fundraise is positive but may not be adequate to stem its market share erosion.

 

Analysts at Goldman Sachs fear Voda Idea could lose another 300 basis points (bps) market share over the next three-four years. It said the company's net debt-to-Ebitda could remain elevated at 19x by March 2025, which could put pressure on its balance sheet. READ MORE

On Wednesday, Voda Idea stock was trading with a gain of 0.6 per cent at Rs 13.61. The stock had hit a high of Rs 13.75 and a low of Rs 13.43 so far in the day, amid a volatile movement on the benchmark indices, the Sensex and the Nifty which were seen gyrating between zones.

Given these negative flows at the counter, will Voda Idea stock drop back to single-digits? Here are the key levels to track as per the technical charts.

Vodafone Idea

Current Price: Rs 13.61

Downside Risk: 33.1%

Support: Rs 13.20; Rs 12.20; Rs 11.80; Rs 11.10

Resistance: Rs 14.70; Rs 15.20; Rs 15.40

Voda Idea stock has now been trading below its long-term (200-DMA) daily moving average for the fourth straight trading session after a gap of 14 months. The stock is also quoting below the other key moving averages such as the 20-, 50- and 100-DMAs. As such, at present, the trend for the stock is said to be negative. CLICK HERE FOR THE CHART

On the daily scale, the stock is seen attempting a pullback following last week's sharp sell-off. The stock has moved within the Bollinger Bands, and may now expect some support around Rs 13.20 levels. Similarly, the weekly chart shows presence of strong support for the stock around Rs 12.20, which the super trend line. Break and sustained trade below the same can trigger a fall towards 200-WMA (weekly Moving Average), which stands at Rs 10.50; with interim support likely around Rs 11.10.

Among the key momentum oscillators, the RSI (Relative Strength Index) has shown a negative crossover on the monthly scale, but MACD remains positive. Thus, indicating a likely phase of consolidation in the near term. The key support stands at Rs 11.80 - its 20-MMA (Monthly Moving Average) followed by the 50-MMA at Rs 10.40. Only, in case, the stock breaks below these levels could it slide all the way into single-digit to Rs 9.10 levels.

In case of a pullback, the 200-DMA at Rs 14.70 followed by the 100-DMA at Rs 15.20 are likely to act as immediate hurdles. In order for the sentiment to revive at the counter the stock will need to break and sustain above Rs 15.40 levels.