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The Nifty Metal index hit a fresh all-time high at 7,042.50 in trades on the Monday. The index witnessed a sharp rally in the last five trading sessions gaining near about 8 per cent as against 1.6 per cent gain on the Nifty50 benchmark.
The renewed buying enthusiasm at these counters were on hopes that stimulus measures taken by China, lower mortgage rates, reduced down-payment for home buyers coupled with debt-extension for Country Garden, could help revive the world second largest economy. Analysts also attributed the recent gains to price hikes implemented by domestic companies.
Select stock such as SAIL, National Aluminium, Hindustan Copper, Hindalco and Tata Steel rallied up to 19 per cent during the period. Further, 9 out of the 15 Nifty Metal stocks were trading at their respective 52-week highs.
Going ahead, will the Nifty Metal and its components be able to sustain their upward momentum? Here's what the charts suggest:
Nifty Metal
Last close: 6,987
Outlook: Upside seems capped
The Nifty Metal index is seen testing resistance around its higher-end of the Bollinger Bands on the weekly and monthly charts, indicating resistance in the zone of 7,050 - 7,200. On the other hand, the Nifty Metal is seen holding above the higher-end of the Bollinger Bands on the daily chart, which stands at 6,940.
The near-term bias is likely to remain positive as long as the index holds above 6,940. However, the longer-term charts suggests that the upside may be capped around 7,050 - 7,200 for now. The index will need to clear this resistance zone for a fresh rally to emerge.
In case, the Nifty Metal fails to hold the 6,940 support, the index can drop back to 6,650-odd levels.
Hindalco
Last close: Rs 486.60
Outlook: Bullish
Upside: 11%
On Tuesday, so far, Hindalco was seen trading consistently above the higher-end of the anticipated trading band, which indicates support at Rs 480, below which immediate support for the stock is seen at Rs 475. The near-term bias is likely to remain bullish as long as the stock holds above these support levels. On the upside, the stock can rally to Rs 540.
SAIL
Last close: Rs 102.70
Outlook: Positive
Upside: 15%
SAIL has bounced back strongly after testing support at its 200-DMA (Daily Moving Average) at Rs 83.70-odd levels in mid-August. The stock has now completed 168 per cent retracement of that corrective move, as it recorded a high at Rs 103.60 on Monday.
The stock is presently seen testing support at the higher-end of the Bollinger Band on the daily chart at Rs 99. A healthy correction at these levels could see the stock dip to Rs 97 - Rs 94 odd levels. Following which, the up move is likely to resume and the stock can test Rs 118 on the upside.
National Aluminium
Last close: Rs 104.30
Outlook: Positive
Upside: 15%
National Aluminium (Nalco) took giant strides in the last two trading sessions, gaining as much as 11 per cent. However, the stock is seen cooling some of those gains and was down 2 per cent in morning deals on Tuesday.
The bias for the stock is likely to remain bullish as long as it holds above the Rs 100-mark. On the upside, the stock can potentially rally to Rs 114, indicates the monthly chart.
Tata Steel
Last close: Rs 131.70
Outlook: Sustenance above Rs 130 is the key
Upside: 8%
After a sharp 13 per cent rally in the last five trading sessions, Tata Steel is now seen testing resistance at the key Rs 130-level, indicates the weekly and monthly chart. Sustenance above this level is the key for the stock, following which it can potentially rally up to its peak at Rs 142.
On the flip side, sustained trade below Rs 130-mark, can trigger a corrective move towards Rs 110-odd levels.
