Metal stocks are up as traders expect a further rise in commodity prices that a supply disruption from Russia following economic sanctions from Western powers will hit supplies. Russia and Ukraine are some of the largest suppliers of non-ferrous metals globally. The Nifty Metal Index has consistently set new highs in recent weeks as commodity prices remain high and investors flock to metal stocks to capitalize on the move. Technically, the index recorded a strong breakout above the last 5-month consolidation range, forming a higher base around the 100-day EMA, highlighting the strong price structure, as per ICICI Direct.
“Going forward, we expect Nifty Metal Index to continue its relative outperformance and move towards 6,750 levels as it is an external retracement of 138.2 per cent of the recent relief,” he added. Currently Nifty metal is at a high of 6,565. Tata Steel and Vardhman Special Steels are the top brokerages stock picking With a time frame of three months in the metals sector.
Why Are Metal Stocks Soaring?
“Going forward, supply apprehensions on the back of the current geopolitical scenario and rising input costs are likely to propel steel prices further,” the note said. Also, due to the current geopolitical scenario, there are supply apprehensions. According to the brokerage, in both these countries, Indian steel companies have an opportunity to increase their exports.
Tata Steel | Target Price: Rs 1,460
Analysts at ICICI Direct believe that Tata Steel has given a breakout above the descending channel which has a complete decline and is a good sign for the next move. He added, “The stock recently generated a breakout above a six-month corrective descending descending channel and is currently forming above a resumption of signals similar to the up move and offers a new entry opportunity ,” They said. Tata Steel is one of the top global steel companies with an annual steel production capacity of ~34 million tonnes per annum. Analysts expect the stock to maintain a positive bias in the coming months and move towards a September 2021 high of Rs 1,460. This means a gain of 9 per cent from Friday’s low.
Vardhman Special Steel | Target Price: Rs 292
The technical charts suggest a favorable risk-reward here with higher base formation on the 52-week EMA. ICICI Direct said, “Vardhman Special Steel share price has formed a higher base above the 52-week EMA and is resuming its primary uptrend signaling strength and making a fresh entry with a favorable risk-reward set-up. offers opportunities.” The company is a steel bar manufacturer for automotive applications. It has exclusive product offerings, which include steel bars and rods and bright bars of various categories of special and alloy steel. The stock is expected to trade at Rs 292 per share, a gain of over 16 per cent.
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