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. Hence, it offers a fresh entry opportunity to ride the next leg of the up move, said ICICI Securities in a note.
Going ahead, the brokerage expects Nifty Metal index to relatively outperform the benchmark and challenge the 52 weeks high in coming months. It has recommended two metal stocks as its top picks – Tata Steel and Graphite India, with three months time frame.
Tata Steel: The stock has generated a breakout above the falling channel containing last six month’s corrective decline, signalling resumption of the up move and offers a fresh entry opportunity. The stock has witnessed a shallow retracement in the last six months. Thus, ICICI Securities expects the Tata Group stock to maintain positive bias and head higher towards ₹1,390 levels (target price).
Graphite India: “The stock is witnessing buying demand from the major support area of 430-470 as it is the confluence of the rising demand line joining lows since March 2020 and the rising 50 months average. Thus, it offers a fresh entry opportunity with a favourable risk reward set up,” the brokerage note stated. It expects the stock to head higher towards ₹618 levels.
Graphite India is leading Indian producer of graphite electrodes with manufacturing capacity of 98000 tonnes per annum spread over three plants at Durgapur and Nashik in India and Nurnberg in Germany.
While GIL manufactures a full range of graphite electrodes, it stays focused on the higher margin, large diameter, ultra-high power (UHP) electrodes. The announcement of increased government spending on Indian infrastructure and the revival of key sectors such as construction, mining, capital goods and automobiles could have a positive impact on steel production and electrodes demand, ICICI Securities added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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