Hindalco, JSW, Tata Steel: Tech charts hint at mixed outlook for metal stks

The NSE Metal index has rallied 3% so far this week, while the Nifty has edged 0.2% higher. Technical charts suggest select frontline metal shares can rally another 14% from present levels.

Shares of metal companies have been in limelight this week amid hopes of stronger growth prospects. Following reports of muted steel production in China in the last two months, analysts expect demand for Indian steel to pick-up in the overseas market.

That apart, Brazil ministry in the last six months has launched multiple probes into the alleged dumping of industrial products, ranging from metal sheets and pre-painted steel among others, by China.

Further, foreign brokerage firm Macquarie has raised its expected target price for market leaders - Tata Steel and Hindalco to Rs 162 and Rs 597, respectively. Macquarie had earlier projected a target of Rs 146 and Rs 570 for the above mentioned stocks.

Meanwhile, domestic brokerage firm Prabhudas Lilladher in its weekly report on metals and mining sector said, that Chinese steel demand is giving mixed signals, even as hopes of a recovery has risen. However, back in India, markets are awaiting the upcoming Lok Sabha elections.

On the earnings front, Prabhudas expects near-term margin pressure on domestic steel companies, while cooling-off input prices could provide relief for the industry in Q2FY25.

So far this week, the NSE Metal index has surged 3 per cent on the bourses, even as Nifty 50 edged 0.2 per cent higher.

Here's a quick chart check on prominent metal stocks on the likely trend going ahead.

Nifty Metal

Current Level: 8,055

Bias: Range-bound

Support: 7,500

Resistance: 8,400

The Nifty Metal index has been trading in the band of 7,500 - 8,400 since the start of the calendar year 2024. Earlier this month, the index once again tested the lower-end of the existing trading band and then bounced. The 7,500-odd level, now also coincides with the 100-DMA (Daily Moving Average) which stands at 7,560 levels. CLICK HERE FOR THE CHART

Further, key momentum oscillators on the daily chart are displaying positive divergence. Hence, the index may continue to remain an outlier in the near-term. Presently, the NSE Metal index is seen testing resistance around the 20-DMA at 8,060 levels. Break and sustained trade above the same, can trigger an up move towards the higher end of the existing trading range, which also coincides with the super trend line resistance at 8,400-levels.

Tata Steel

Current Price: Rs 150 

Potential Upside: 9.3%

Support: Rs 148; Rs 142

Resistance: Rs 158

Tata Steel is seen making higher highs and higher lows on the daily scale after testing the 200-DMA support in early November 2023. Last week, the stock tested support around the lower-end of the rising trend line, which also coincides with the 50-DMA at Rs 142.

Going ahead, sustained trade above the 20-DMA, which stands at Rs 148, will likely lead the stock towards Rs 164, with interim resistance seen around Rs 157. CLICK HERE FOR THE CHART

Hindalco

Current Price: Rs 541

Potential Upside: 13.7%

Support: Rs 522, Rs 500

Resistance: Rs 540-Rs 545

The stock is seen attempting to make a fresh breakout above the multiple resistance zone around Rs 540 - 545. The stock is expected to gain strength on closing above this resistance zone for two consecutive trading days. Following which, the stock can potentially rally to Rs 615 levels. 

On the other hand, failure to clear the hurdles, could see the stock slip back to its 20-DMA at Rs 522. The overall bias for the stock is likely to remain cautiously optimistic as long as the support at Rs 500 is held. CLICK HERE FOR THE CHART

JSW Steel

Current Price: Rs 813

Downside Risk: 11.4%

Support: Rs 797

Resistance: Rs 850

JSW Steel seems on the verge of turning bearish, with long-term moving averages likely to climb atop the short-term moving averages on the daily scale. The 20-DMA at Rs 812 has already slipped below the 50-DMA at Rs 815. Similarly, the 100-DMA also stands at Rs 812, and seems on course to top both the 20- and 50-DMAs. Further, the 200-DMA too is seen rising and currently stands at Rs 797. CLICK HERE FOR THE CHART

As such, the 200-DMA at present seems the key support for the stock. Break and sustained trade below the same, can trigger a slide towards Rs 720 levels, with interim support seen around Rs 760.

On the upside, the stock will need to clear the hurdle at Rs 850 in order to reverse the current negative bias.

SAIL

Current Price: Rs 131

Downside Risk: 13.7%

Support: Rs 125

Resistance: Rs 135; Rs 145

SAIL had recently broke its rising trend line support, and then bounced back. The current pullback seems susceptible to selling at higher levels, as the stock has made lower levels on the daily time-frame. CLICK HERE FOR THE CHART

As such the stock is expected to face resistance around Rs 135-odd levels, and the up move for the stock seems capped around Rs 145 levels. The overall trend suggests that the stock may face selling pressure at higher levels and could test the 100-DMA on the downside at Rs 113. Interim support for the stock can be expected around Rs 125 - its 50-DMA.

National Aluminium

Current Price: Rs 146

Downside Risk: 13.7%

Resistance: Rs 152; Rs 157

National Aluminium has broken from its higher highs, higher low pattern on the daily scale. The trend line support is now expected to act as a resistance going ahead. Further, the 20-DMA at Rs 152, seems to be on course to dip below the 50-DMA which stands at Rs 149. Technically, this would mean that the short-term bias for the stock would be negative.

Going ahead, the stock is expected to face resistance around Rs 152, and higher around Rs 157 levels. On the downside, the stock may seek support around its 100-DMA at Rs 126. CLICK HERE FOR THE CHART