Metal stocks to look up as corrective phase ends: Report

Attractive valuations may lead a rally in metal stocks, showed a technical analysis report on Wednesday.

According to brokerage house Centrum's thematic report on the metal sector, the up-move in the stocks of Tata Steel, Jindal Steel and JSW Steel comes on expected lines as the correction in the Nifty Metal index "seems to be over".

The report said that the index had been moving in a corrective phase for the last five months and "for the time being", the process of correction seems to be over.

"Considering overall chart structure, we are expecting an up-move towards 3,050-3,200 (points) in the Nifty Metal index," the report said.

"We may see a rally of 10-12 per cent in Nifty Metal index in coming weeks."

Of the three given companies, "Tata Steel and Jindal Steel are our preferred picks and can be bought for coming 3-4 months with the given stop-losses as mentioned in the report", it said.

Post the technical analysis, the report noted that the index came near the Potential Reversal Zone (PRZ) level and started bouncing from last two sessions.

On Tata Steel, the report said that it had a strident rally in year 2016 and 2017. However, the stock started correcting since the start of the calendar year 2018.

"The corrective phase seems to be over as the stock is taking support around 50 per cent retracement level of the mentioned rally," the report said.

In line with the peers, Jindal Steel also seemed to have entered a corrective phase in the calendar year 2018.

Recently, the stock made a low a bit below the PRZ and then started rebounding.

--IANS

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