Technical analysts suggested avoiding entering Vodafone Idea for the time being as the worst is not over for the stock.

What Happened: Vodafone Idea’s shares have fallen 3% on Tuesday, extending its fall to 23% in the last month. The stock has been under pressure after Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) reportedly curtailed their borrowing calls and demanded additional collateral from the company. REC confirmed the development in an earnings call.

Technical Views: Analysts said the stock has shown weakness in the technical indicators. Jigar S Patel, senior manager – technical research analyst, Anand Rathi Shares and Stock Brokers said, “Vodafone Idea is exhibiting significant weakness, primarily indicated by its persistent trading below the 200-day Exponential Moving Average (DEMA) and the Ichimoku Cloud, both key technical indicators used to gauge market trends and investor sentiment.

“The 200 DEMA serves as a reliable measure of long-term trend strength, and trading below this level reflects sustained bearish momentum and pressure from sellers, suggesting that investors lack confidence in the stock's prospects. “

Patel added that the stock is trading below Ichimoku Cloud, an indicator that helps in identifying support and resistance zones, showing the stock’s weakness and limited upward momentum.

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“On the indicator front, the stock's Relative Strength Index (RSI) has reached extremely oversold levels on the daily chart. The RSI, a measure of recent price changes that assesses if a stock is overbought or oversold, suggests that such low levels could trigger a short-term bounce as the selling pressure begins to fade, potentially pushing the stock price towards a temporary target of 9-10.

Despite this short-lived recovery potential, the stock faces immediate resistance at 8.5, where selling pressure could limit further gains, and support near 7, where buyers may step in to prevent a deeper decline. Given these technical indicators, the recommendation is to avoid taking long positions in Vodafone Idea at this point, as the stock remains weak and shows no signs of a lasting trend reversal.”, Patel noted.

Kushal Gandhi, technical analyst at StoxBox said, “The share price of Vodafone Idea has declined by 60% from its record highs over the past 82 trading sessions. This correction rally followed the formation of a double-top price pattern, which signals a potential trend reversal. Increased selling pressure was noted after a significant breakdown from this double-top pattern on September 19, with no signs of recovery in the price action.”

“Currently, the share price is trading below its key 200-day moving average, with shorter-term average lines serving as an immediate supply zone — a concerning development. The stock displays extremely low readings for earnings per share (EPS) and price strength ranking, while the relative strength index (RSI) is currently in the oversold territory, suggesting the possibility of a mild pullback. However, we advise against catching a falling knife and bottom-fishing the stock against its ongoing trend”, Gandhi added.

Price Action: Shares of Vodafone Idea were down 3.88% to ₹7.93 on Tuesday.

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