SAIL at 14-yr high; Can steel stocks extend rally? Here's what charts say

The Nifty Metal index has gained 6% in the last 3 days outperforming the benchmark Nifty. Here's a technical outlook on SAIL, Tata Steel, JSW Steel and Jindal Steel.

Steel stocks have outperformed in recent trading days on the back of upbeat production & sales in FY24 and hopes of economic rebound in China.

Tata Steel reported a record-breaking 20.5 million tonnes of steel production in FY24. SAIL too posted 5 per cent growth in crude steel production at 19.2 million tonne for the financial year ended March 2024. SAIL also achieved its highest-ever sales volume of 17.1 MT for the year.

Meanwhile, China's manufacturing activity expanded in March after five consecutive months of contraction raising hopes of a recovery in the world's second largest economy.

The NSE Nifty Metal index has surged over 6 per cent in the first three trading sessions of this month as against a mere 0.2 per cent rise in the benchmark Nifty 50 index.

Here's what the technical charts suggest for key steel stocks going ahead.

Nifty Metal

Current Level: 8,726

The Nifty Metal index picked up momentum after testing support at its 20-WMA (now at 7,900) in March. The index can potentially rally another 2-3 per cent from current levels. Long-term chart suggests that the bias is likely to favour the bulls as long as the index quotes above 8,600 levels. Sustained trade below the same can trigger a correction. CLICK HERE FOR THE CHART

Tata Steel

Current Price: Rs 165.60

Downside Risk: 8%

Resistance: Rs 170

Tata Steel is seen trading with a positive bias since November 2023. The stock has managed to log higher highs and higher lows. Given the recent sharp gains, it will be prudent to wait for a price correction at the counter. 

The daily chart suggests that the stock is expected to trade with a positive bias above Rs 165. On the upside, near resistance is seen around Rs 170 level. In case of price correction, the stock can test its 20-DMA (Daily Moving Average) at Rs 152. CLICK HERE FOR THE CHART

The overall bias for the stock is likely to remain upbeat as long as the stock holds above Rs 158 on a monthly closing basis.

SAIL

Current Price: Rs 150.70

Potential Upside: 19%

Support: Rs 140

SAIL has rallied nearly 13 per cent in just three trading sessions. The stock is presently trading at a 14-year high. The broader trend suggests that the stock seems on course to test its 2010 highs around Rs 170-180 levels. Outlook for the stock is likely to remain upbeat as long as it sustains above Rs 140. CLICK HERE FOR THE CHART

JSW Steel

Current Price: Rs 872

Potential Upside: 6%

Support: Rs 840

JSW Steel is seen trading in a rising channel since June 2022 on the weekly scale. The stock has consistently made higher highs and taken support around its 20-WMA in case of dips. Towards the end of the March, the stock tested the lower-end of this channel, i.e. the 20-WMA which now stands at Rs 780. CLICK HERE FOR THE CHART

The stock is now expected to make a higher high, i.e. surpass it earlier high of Rs 895 in the near-term. The rising channel suggests that the stock can test Rs 925 on the upside. Near support for the stock can be expected around Rs 840.

Jindal Steel

Current Price: Rs 897

Downside Risk: 12%

Jindal Steel has witnessed a sharp 44 per cent rally in the last six months. The stock is presently trading in the overbought zone on the long-term charts, hence one need to be cautious at higher levels. Having said that, the outlook is expected to favour the bulls as long as the stock maintains above Rs 880 on a monthly closing basis. In case of a price correction, the stock can correct to Rs 790 levels. CLICK HERE FOR THE CHART