Nifty metal index has soared a whopping 9.6% so far this month, outperforming the benchmark Nifty 50, which has been flat in the same time period. “The Nifty metal index logged a resolute breakout from three months higher base formed in the vicinity of 100 days EMA, highlighting robust price structure,” said ICICI Direct in a note. The brokerage firm believes the index is offering a fresh entry opportunity for investors to ride the next leg of up-move. “Going ahead, we expect Nifty Metal index to relatively outperform the benchmark and challenge the 52 weeks high in coming months,” they added.
Metal sector is also believed to benefit from China’s step to cut reserve requirement ratio coupled with the recent correction in the Dollar index. ICICI Direct is bullish on two stocks, backed by fundamental and technical analysis.
Tata Steel: Buy
Target price: Rs 1,390
Tata Steel share price has soared more than 9% so far in 2022 to now trade at Rs 1,247 per share. ICICI Direct said that Tata Steel has generated a breakout above the falling channel containing the last six month’s corrective decline, signaling resumption of the up move and offering a fresh entry opportunity. The brokerage firm said that there is a strong base at the 52 weeks EMA which is likely to act as key support placed around Rs 1,100 levels.
In the October-December quarter, Tata Steel’s net debt has declined to Rs 62,869 crore from Rs 68,860 crore. The target price of Rs 1,390 implies an upside of 11.4%. ICICI Direct has a three-month time frame for the scrip.
Graphite India: Buy
Target price: Rs 618
The stock is witnessing buying demand from the major support area of Rs 430-470, said ICICI Direct, adding that the levels mentioned are the confluence of the rising demand line joining lows since March 2020 and the rising 50 months average. “We expect the stock to head higher towards | 618 levels as it is the 61.8% retracement of the previous major decline,” they added.
Graphite India is the largest Indian producer of graphite electrodes and one of the largest globally, by total capacity. “As on September 30, 2021 for the consolidated entity GIL has cash and cash equivalents of Rs 2631 crore, while for the standalone entity GIL has cash & cash equivalents of Rs 2208 crore,” ICICI Direct said. The target price implies a 19% upside from current levels.
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