Rally in Metal index has more steam left; Vedanta may soar another 15%

While Nifty Metal index is just 140 points short of a new historic peak, Vedanta shares gracefully achieved it today

The Nifty Metal index has surged over 9 per cent so far this week amid expectations that Russia-Ukraine conflict can significantly impact steel trade.

The Metal index touched an intra-day high of 6,173 and is 140 points short of all-time high of 6,312 level touched in October 2021. During the last three sessions, where the frontline indices could not add many gains, the Nifty Metal index climbed 850 points, offering 16 per cent returns.

"The conflict between Russia and Ukraine risks has impacted the steel market significantly, in our view. Russia and Ukraine together accounted for 45 million metric tonne of exports in CY21 out of a global seaborne trade of 420 mnt. Economic sanctions on Russia could impact supplies into Europe, potentially leading to higher pricing in the region, in our view. The disruption of Russian and Ukraine exports could potentially be a positive for Indian exporters as well," said analysts at Nomura in a recent note.

Technically, too, the outlook for the Nifty metal index and its constituents remain robust. Here is the outlook for upcoming sessions:

Nifty Metal
Outlook: The long term bull-run is intact above 5,200; currently eyeing 6,500

The Nifty Metal index continues to see added interest on every possible decline. The medium-term outlook is well placed above 5,200 levels and unless this mark is violated, the up move might add longs further. The current momentum signals a rally towards 6,500 levels, a surge of over 5 per cent. CLICK HERE FOR THE CHART
 
Tata Steel Ltd (TATASTEEL)
Likely target: Rs 1,400 and Rs 1,470 (after crossing Rs 1,305)
Upside potential: 7% to 12%
 
The stock is attempting to conquer the upper rising trendline resistance at Rs 1,305 level. If it manages to do that in upcoming sessions, the breakout could trigger a fresh upside towards Rs 1,400 and Rs 1,470 levels. These are the next crucial obstacles, according to the daily chart. The support stands at Rs 1,240 level. CLICK HERE FOR THE CHART
 
Jindal Steel & Power (JINDALSTEL)
Outlook: Breakout above Rs 460 could add another 10%

On a broader angle, the "Rising channel" pattern seems to become wider as the formation continues to emerge, shows the daily chart. This clearly points to the next hurdle at Rs 460 level. The current scenario has pulled the Moving Average Convergence Divergence (MACD) above the zero line, a significant spot that translates a bullish momentum. The overall trend is bullish as underneath strength and accumulation show support around Rs 430- Rs 425 levels. In addition, breakout above Rs 460 could add another 10 per cent jump to Rs 510 levels. CLICK HERE FOR THE CHART
 
Vedanta Ltd (VEDL)
Likely target: Rs 450
Upside potential: 15%
 
The shares of Vedanta Ltd hit a new historic peak on Wednesday. The previous all-time high was at Rs 385.85 levels. When a stock claims a new territory, especially when the broader markets are significantly dented, the momentum and sentiment speak of a deep interest of market participants. Going forward, as long as the support of Rs 370 is defended, the bullish rally could continue and the next reach could be Rs 450 level. CLICK HERE FOR THE CHART