Decade-high Aluminium price can spark up to 25% rally in these metal stocks

The stock of Hindalco is attempting to close decisively above the resistance of Rs 475 with strong volume

Base metal stocks including Hindalco, Vedanta and National Aluminium were in focus on Wednesday as a spike in Aluminum prices brighten earnings prospects.

Early this week, aluminium reached $3,000 a ton in London for the first time in 13 years amid expectations that supply disruptions are here to stay, while demand keeps rising. The metal kept climbing even after a 15 per cent surge over the last three weeks. READ MORE

According to Yash Sawant, research associate at Angel Broking, limitation on energy-intensive smelting capacities and restricting illegal over-production (western Xinjiang region) has hampered Aluminum supply chain.

"Aluminium market is expected to remain tight as the energy usage limitation in China are expected to increase in the coming months in order to curb their emission levels," he says. 

Against this backdrop, here's how metal stocks look on charts:

Hindalco Industries Ltd (Hindalco)
Likely target: Rs 500 and Rs 525
Upside potential: 5% to 10%

The stock is attempting to close decisively above the resistance of Rs 475 with strong volume. When this happens, the upside breakout may see a surge towards Rs 500 and Rs 525 levels, as per the daily chart. As per the current candlestick structure, the stock has a closing basis support at Rs 460-level. Further, the "Higher High, Higher Low" formation suggests a positive bias from the medium-term outlook, as per the weekly chart. CLICK HERE FOR THE CHART
 
National Aluminium Company Limited (NATIONALUM)
Likely target: Rs 115
Upside potential: 15%

The "Golden Cross" pattern indicates a bullish breakout for the stock above Rs 90-level, as per the weekly chart. This positive up move in the overbought category of Relative Strength Index (RSI) exhibits a promising trend ahead. The medium-term outlook points in the direction of Rs 115-level. The immediate closing basis support for the stock is placed at Rs 90. CLICK HERE FOR THE CHART

PG Foils Ltd
Likely target: Rs 325
Upside potential: 10%

In the past three months, the shares of PG Foils have almost doubled and continue to climb higher levels aggressively. The “Higher High, Higher Low” formation has a support at Rs 260 and as long as the support is held, the bullish bias may see the stock rally to Rs 335 -325 levels. The weekly chart set-up also suggests a bullish price pattern, in case of any profit booking at the counter, the stock may witness a reversal near support level. CLICK HERE FOR THE CHART
 
Century Extrusions Limited (CENTEXT)
Likely target: Rs 12 and 13.60
Upside potential: 20%

The stock is making efforts to conquer its 50-day moving average (DMA) decisively indicating a positive outlook. The 50-DMA is placed at Rs 9.95 level. The 100-DMA and 200-DMA are placed at Rs 8.60 and Rs 6.70 respectively, which are the key support levels, as per the daily chart. A breakout above 50-DMA may see the stock rising towards previous highs of Rs 12 and 13.60 levels. CLICK HERE FOR THE CHART
 
Manaksia Aluminium Co Ltd
Likely target: Rs 28 and Rs 30
Upside potential: 18% to 25%

The share of Manaksia Aluminium Co are heading near its all-time high of Rs 23.90, and as long as the support of 100-DMA is maintained, the positive rally may even see higher levels. The 100-DMA is placed at Rs 16.80. The recent surge in stock price is accommodated by strong volume suggesting keen interest of market participants. The overall trend seems heading towards Rs 28 and Rs 30, according to the daily chart. CLICK HERE FOR THE CHART