Are metal stocks bottoming out as China pushes for a stimulus package?

Until major hurdles are not conquered by Metal index, the turnaround scenario may fade sooner

After two straight days of gains, investors booked profit in metal stocks on Friday. At 11:40 AM, the Nifty Metal index was down 0.44 per cent as against a 0.34 per cent gain in the Nifty50 index.

Individual stocks, however, were mixed. Hindustan Zinc, Hindalco, APL Apollo Tubes, and Nalco were ruling up to 2 per cent higher, while Tata Steel, Jindal Steel, SAIL, and JSW Steel declined up to 1 per cent.

Including Friday's intra-day gains, the Nifty Metal index has surged over 5 per cent in three days amid reports that China was weighing $220 billion fiscal stimulus measures. The revival in China is key for the improvement in prospects of global metal and commodity companies, said analysts. READ ABOUT IT HERE

The Nifty Metal index is 30 per cent off record highs hit in April 2022. Steel Authority of India has shed close to 70 per cent, while Tata Steel, Vedanta, Hindalco Industries, and Jindal Steel & Power trade 40 per cent lower from their respective highs, data show. 

Against this backdrop, here's the near-term outlook for key metal stocks.

Nifty Metal

Chart pattern: Death cross, needs to surpass crucial hurdles. 

The metal index has formed a "Death Cross" and will show more bearishness if the neckline - recent low of 4,437 levels - gets violated. To see a turnaround, the index needs to scale beyond 5,000-mark, which is its initial hurdle, and then cross the 5,500-mark to build a bullish undertone. So far, the recent low stays as the support level. CLICK HERE FOR THE CHART

Tata Steel Ltd (TATASTEEL)

Likely target: Rs 970 and Rs 1050

Shares of Tata Steel have formed a "Double Bottom". If this pattern materialises, the positive sentiment could see the stock rally towards Rs 970. If supported by good volume-based buying, the up move may even extend to Rs 1,050 levels. The closing basis support comes at Rs 850 levels. While there is divergence on the Relative Strength Index (RSI), the technical indicator shows signs of bullishness, as it has moved above the oversold territory. CLICK HERE FOR THE CHART

Steel Authority of India (SAIL) 

Likely target: Rs 80 and Rs 86

Steel Authority of India shares have conquered the initial obstacle of Rs 71, and are set to rally towards Rs 80 and Rs 86 levels. The support comes in at Rs 67. Volumes have been rising gradually, exhibits the daily chart. CLICK HERE FOR THE CHART

Vedanta Ltd (VEDL)

Key level: Needs to conquer Rs 240

A strong close over Rs 240, which is the immediate hurdle for Vedanta, could trigger an upside rally towards Rs 280-mark, shows the daily chart. The RSI has moved above the oversold territory, suggesting strength. The support comes in at Rs 210 levels. CLICK HERE FOR THE CHART

Jindal Steel & Power (JINDALSTEL)

key level: Needs to sustain over Rs 250

This stock needs to close above the Rs 250-mark on good volumes to stablize and consolidate. CLICK HERE FOR THE CHART

 

Hindalco Industries Ltd (Hindalco)

Likely target: Rs 385 and Rs 440

A close above Rs 325 hints at a possibility of the stock attempting to hit Rs 385, which is the next hurdle for it, according to the daily chart. The Moving Average Convergence Divergence (MACD) has a bullish crossover. This suggests higher levels in the sessions ahead. If Rs 385 is taken out with aggressive volumes, it can then move upto Rs 440 levels. CLICK HERE FOR THE CHART