Charts indicate up to 15% fall in select metal stocks from current levels

The metal index on the NSE has tumbled 14 per cent so far from its historic peak and continues to drift lower

The Nifty Metal index registered a historic peak at 6,825 on April 11, 2022, and since then it has been on a downward spiral. The index has tumbled 14 per cent so far and continues to drift lower. 

Ahead of this correction, the index had gained a massive three-fold - from lows of 1,480-odd level during the Covid-19 induced fall. During that particular fall, the index had tanked almost 50 per cent.

Stocks like Tata Steel, which soared five-fold to Rs 1,534 and Vedanta, which zoomed eight-fold are now displaying signs of weakness. Tata Steel and Vedanta have dropped 20 per cent and 10 per cent, respectively from their historic peaks.
 

Other metals like Hindalco and National Aluminium Company have witnessed a steeper fall of around 30 per cent so far from their respective all-time highs. 

Nifty Metal

Outlook: Testing the support at 200-DMA

The Nifty Metal index seems headed towards testing the support of 200-day moving average (DMA) set at 5,807. The index did violate the support in January and Febuary, 2022, but managed to retain the positive bias as the breakdown could not add follow-up selling.  On the higher side, the index requires to scale the 6,000 mark aggressively to regain the losing strength, shows the daily chart. CLICK HERE FOR THE CHART

Vedanta Ltd (VEDL)

Likely target: Rs 320 and Rs 290

Downside potential: 9% to 16%

There is a formation of “Head and Shoulder” patten on the daily chart for the stock. The pattern is bearish and signifies further downside. As long as the stock trades under Rs 355, the downside doors are open for Rs 320 and Rs 290 levels. On the upper end, the stock needs to conquer Rs 375 to dismantle the pattern. Moreover, the Moving Average Convergence Divergence (MACD) is on the verge to break the zero line downside, if that gets materialised then the weakness may see added momentum. CLICK HERE FOR THE CHART

Tata Steel Ltd (TATASTEEL)

Likely target: Rs 1,050 (after violating 100-DMA)

Downside potential:  13%

Tata Steel broke out in March 2022 after two months of consolidation and sideways movement in the range of Rs 1,250 to Rs 1,050 levels. The present price action is testing the breakout mark as well as the crucial 200-DMA support . While the stock trades under Rs 1,272-level, its 200-DMA, the support of Rs 1,223 needs to be clearly monitored, which is its 100-DMA. A conclusive breach of 100-DMA may trigger further downside to Rs 1,050. CLICK HERE FOR THE CHART

Hindalco Industries Ltd (Hindalco)

Likely target: Rs 400 and Rs 375

Downside potential:  9% to 15%

The stock has violated its 200-DMA after October 2020, a significant indicator which investor’s community consider while taking an informed decision. The 200-DMA is positioned at Rs 490. The stock is down 30 per cent from its historic peak and all the major indicators such as Relative Strength Index (RSI) and MACD are reflecting a negative bias. Especially, the RSI, which trades in the oversold condition, is not exhibiting any decent reversal. The next support for the stock comes at Rs 400 and Rs 375 levels. CLICK HERE FOR THE CHART

National Aluminium Company Limited (NATIONALUM)

Likely target: Rs 80

Downside potential: 14% 

The stock trades below its 200-DMA indicating weakness and a negative bias. The 200-DMA is placed at Rs 100. The sentiment is gradually gaining weaker strength and the stock seems to be headed towards Rs 80, its next crucial support, according to the daily chart. CLICK HERE FOR THE CHART