⚙️ Nifty Metal: A sectoral Outlook ⚙️
After Covid, Nifty Metal saw one of the best rallies, owing to strong demand from both domestic and global markets, as well as high metal prices. However, for the past two months, Nifty Metal has underperformed the market, falling nearly 22% from its 52-week high.
🤔 Does this mean the outperformance is over❓
🤔 Will the Downside momentum continue❓
📉 Here's what the chart says 📉
★ A bear market is defined as a market that has experienced a 20% or more significant correction, and the same can be depicted from the Nifty Metal graph.
★ The index is in a downward trend and has dropped significantly over the last two months.
★ The index is currently trading below its 50, 100, and 200 day EMAs, indicating price weakness.
★ It has also broken the one-year trendline it had been following and is currently retesting it.
★ Any daily close below this trendline will cause the index to fall further.
★ According to the charts, the nifty metal index could test its next major support at Rs 4560.
**💰 Entry: If the hourly index candle closes below 5296, it is prudent to short sell metal stocks.
🌟One can take positions in Stocks which are structurally weak, i.e., Jindal Steel, Tata Steel, NMDC.
🚫 Stop Loss & targets would be stock specific.**
🙅♂️ Fundamentals that are pressuring the metal stocks:
★ Metal stocks were among the worst performers on Dalal Street for the last two weeks, thanks to the government's surprise steep increase in export tariffs.
★ There is a huge demand for metal and its by-products worldwide, but the increase in steel export duties will be negative for the steel sector in the near future, putting pressure on metal stocks.
★ Investors should wait for some more dip in the metal sector, and once the situation settles down, they should start accumulating fundamentally good scripts for long term gains.
★ The US dollar index has retreated from its highs, but the overall structure is bullish; similarly, commodity currencies, such as Australian Dollar Futures, have retreated from their highs, but the overall structure is bearish.
★ If these circumstances continue, the metal space will take longer to form the bottom.
🌟🌟 One can also look for accumulating fundamentally strong metal stocks in the correction for the long term stock price appreciation. 🌟🌟
🌟 Stocks that can be accumulated are:
1. Hindalco
2. Tata Steel
3. JSW Steel
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