Metal index tops the rank of worst performers in Feb, rebound may not hold

Hindustan Copper and Vedanta may fall up to 19 per cent due to their weak chart structures.

Nifty metal index tops the lists of worst performers in February by falling over 18.50 per cent.  The index is followed by Nifty media index, which tumbled 10.20 per cent. While metal stocks exhibited a smart rebound on Wednesday, with Jindal Steel & Power and Hindustan Zinc soaring over 3 per cent, the question is whether this recovery in metals stock will continue to see higher levels.

The overall trend in the broad market has remained subdued, but weakness in metal stocks has added fuel to the fire. In February, Shares of Hindustan Copper plunged 21 per cent, while Vedanta and Hindalco Industries plummeted 16 per cent and 14 per cent, respectively. Shares of Tata Steel too saw a cut of 13 per cent during the same period. 

Barring Jindal Steel & Power, all other metal stocks are suggesting weakness and a shift in sentiment. Major stocks such as Tata Steel, Vedanta and Hindalco Industries have already fallen beneath the crucial 200-day moving average (DMA).

Here’s the technical outlook of metal stocks amid their worst performance in February:- 

Nifty Metal

Outlook: Double Top breakdown

Nifty metal index has broken a crucial support of 5,500 levels, implying more downside ahead. The immediate support exists at 5,000 and 4,800 levels. Only a move over 6,000 mark, which has now become a key hurdle for any shift in sentiment. The trend is downward, with every upside expected to be met with added selling pressure. 

On a broad outlook, there is a breakdown of “Double Top” at 6,200-mark, displaying medium-term weakness in the index. CLICK HERE FOR THE CHART

Hindustan Copper Ltd (HINDCOPPER)

Likely target: Rs 85 and Rs 75

Downside potential: 12% to 19%

A conclusive breakdown beneath the 200-DMA signals a selling pressure that appears to witness aggression in the absence of a resilient rebound and same is the case with Hindustan Copper shares. If the stock continues to stay under the 200-DMA, it may dwindle towards Rs 85 and Rs 75 levels. 

While the Relative Strength Index (RSI) is making efforts to rise over the zero line, the stock needs to overcome the 200-DMA placed at Rs 108 to confirm a breakout. CLICK HERE FOR THE CHART

Vedanta Ltd (VEDL)

Likely target: Rs 240 and Rs 220 

Downside potential: 10% to 16%

Shares of Vedanta are currently hovering near the support of the 200-day moving average (DMA) positioned at Rs 268, and simultaneously testing the 50-weekly moving average (WMA) placed at Rs 276. If the stock fails to shield these bolstering supports, it may enter a medium-term downtrend and could slip to Rs 240 and Rs 220 levels, as per daily and weekly chart. On the higher side, the robust hurdle is placed at Rs 290. CLICK HERE FOR THE CHART

Tata Steel Ltd (TATASTEEL) 

Outlook: Needs to guard the 200-DMA

Shares of Tata Steel have broken all the support moving averages and poised to convincingly breach the major 200-DMA set at Rs 105. Unless the stock breaks the 200-DMA, it could attempt to cross Rs 110 and Rs 115; its 50-DMA and 200-DMA. However, if the stock fails to guard the 200-DMA, it may slip to Rs 90 and Rs 85 levels. 

Bullish bias shall prevail only when the stock overcomes Rs 115, its 50-DMA. CLICK HERE FOR THE CHART

Jindal Steel & Power (JINDALSTEL)

Outlook: support of Rs 540

Shares of Jindal Steel & Power are currently holding the upward bias, but if they slip below the support of Rs 540, the stock may lose the bullish grip. The breakdown may lead a downward rally in the direction of Rs 520 and Rs 500 levels, which are its next support levels. 

A decisive breach of Rs 500 level may further push the stock down to Rs 470 level.  The stock must overcome the major hurdle of Rs 600 to regain the bullish stance. When that occurs, the trend may reach to Rs 650 levels, hitting a new 52-week high. CLICK HERE FOR THE CHART