Tata Steel, Vedanta look strong on charts, may resist China slowdown woes

Technically, probability of metal stocks entering a negative trend remains negligible. A resilient bullish trend seems clearly visible in Tata Steel and Vedanta.

China - the world's second largest economy is seen impacted with strict Covid-19 related restrictions coupled with a firmer US dollar. The Asian neighbour's unexpectedly slowed in July, with growth in industrial output, fixed-asset investment, total social financing and new yuan loans slowing 

Meanwhile,  China's central bank on Monday unexpectedly cut interest rates for the second time in 2022 in an attempt to revive credit demand to support growth.

China is the largest steel producer and is a key manufacturer for the world. A slowdown in the Chinese economy would have adverse impact on global economies too, mainly the metal sector.

While, Copper future on London Metal Exchange gained 0.35 per cent to $8,008 a tonne on Tuesday, the base metal is quoted some 25 per cent lower form its recent March peak.

Amid this development, here’s an outlook on select key metal stocks: - 

Nifty Metal

Outlook: Heading towards 6,200

The Nifty Metal Index has witnessed a sharp rally since early July, crossing the half-way mark of the entire drawdown witnessed post March 2022. The robust structure exhibits a vertical upside with a firm momentum, surpassing the 200-day moving average (DMA) set at 5,631 mark, a key determinant by market participants while investing. The next hurdle for the index falls at 6,200 level, and has an immediate support at 5,700 mark. CLICK HERE FOR THE CHART

Hindalco Industries Ltd (Hindalco)

Outlook: Next breakout over 200-DMA

Shares of Hindalco Industries stand closer to the Rs 457 mark, which is the 200-DMA. This appears to act as an immediate hurdle as Relative Strength Index (RSI) failed to regain strength in the overbought territory, displays the daily chart. Only a decisive close over the same would signal a breakout and the next up move shall begin. As long as the support at Rs 400 holds the current momentum shall attempt to take out the 200-DMA obstacle. CLICK HERE FOR THE CHART

Tata Steel Ltd (TATASTEEL) 

Likely target: 126

Upside potential: 11%  

Shares of Tata Steel crossed the 200-DMA positioned at Rs 109.60 mark conclusively. The price action has initiated a breakout signaling a rally towards Rs 126, the following impending hurdle.  The RSI stood firm in the overbought category exhibiting robust price strength. The positive outlook shall get negated, only if the 200-DMA is violated on a closing basis. CLICK HERE FOR THE CHART

Vedanta Ltd (VEDL)

Outlook: Towards 200-DMA

With a gradual up move seen at the counter, the stock seems to be hinting for a rally towards the 200-DMA located at Rs 284 level. The immediate support for the stock exists at Rs 252, followed by the 50tDMA, at Rs 238, according the daily chart. The RSI is on the course to enter overbought category, which needs to be examined further.  CLICK HERE FOR THE CHART

National Aluminium Company Limited (NATIONALUM)

Outlook: Stable trend over 50-DMA

The Moving Average Convergence Divergence (MACD) has crossed the zero line upward suggesting a positive momentum ahead, shows the daily chart. The stock price is stable over the 50-DMA placed at Rs 76.20 and displays a gradual progression. The next hurdle for the stock is seen at Rs 91, which is the 100-DMA mark.  CLICK HERE FOR THE CHART