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    Big Movers on D-St: What should investors do with SAIL, Tata Steel & JSW Steel that hit 52-week lows?

    Synopsis

    Sectorally, selling was seen in metals, basic material, oil & gas, energy, and public sector stocks while buying was seen in auto, capital goods, IT and consumer discretionary segments. Metal stocks fell the most as several brokerages downgraded the sector after the government imposed export duties on iron ore and some steel intermediaries.

    Big Movers on D-St: What should investors do with SAIL, Tata Steel & JSW Steel that hit 52-week lows?Agencies
    The Nifty Metal index fell over 8 per cent and the future outlook also remains bearish. In April, the index reversed from its lifetime-high and breached its prior rising trend.
    Indian market failed to hold on to the gains and closed in the red on Monday weighed down by losses in metal as well as banking counters.

    The S&P BSE Sensex fell 0.07 per cent while Nifty50 recouped some losses and closed above 16,200 levels.

    Sectorally, selling was seen in metals, basic material, oil & gas, energy, and public sector stocks while buying was seen in auto, capital goods, IT and consumer discretionary segments.

    Metal stocks fell the most as several brokerages downgraded the sector after the government imposed export duties on iron ore and some steel intermediaries.

    The Nifty Metal index fell over 8 per cent and the future outlook also remains bearish. In April, the index reversed from its lifetime-high and breached its prior rising trend.

    The index formed a bearish reversal pattern - Shooting Star - on April monthly closing wherein a further decline was expected and a breakdown below it confirmed the reversal in May month with sharp cuts across stocks in the sector, suggest experts.

    “We have observed a bearish divergence on the long-term timeframe chart, while medium-term indicators are negatively poised and would continue to remain under pressure with the global meltdown in the metals sector and domestic negative news flow of increase in export duty,” says Vikas Jain - Technical Research Analyst at Reliance Securities.

    “The index is trading near to its multi-month lows of 5,200 levels. Any decline below this would further drag the index to 4,800-4,500 levels to test being the 200-week average,” he said.

    Stocks that hit 52-week lows in the metal space included names like SAIL which was down nearly 11 per cent, JSW Steel which plunged more than 13 per cent, and Tata Steel which declined more than 12 per cent on Monday.

    Here's what Vikas Jain - Technical Research Analyst at Reliance Securities recommends investors should do with these stocks when the market resumes trading today:

    JSW Steel
    The stock has made multiple tops in the range of Rs 770-790 levels and retraced sharply by falling 30 per cent from its top in the last one month.

    The monthly Doji candle in April near the top indicates a reversal trend and a breakdown on the daily charts from its averages confirmed a down-move in the middle of May.

    We believe the stock has completed its price correction and another 5-7 per cent down would complete his vertical fall in the current week.

    Its 200-week average support is placed around Rs 540 levels with a range of +/-4 per cent should act as good support from current levels.

    Tata Steel
    The stock is under pressure since it broke below its 200-days average at Rs 1,225 levels and witnessed a further decline on Monday.

    Key support of Rs 1,060 is being broken and if it sustains below that, then it would open room for further downside to Rs 940-960 levels.

    SAIL
    The stock has plunged by about 50 per cent from its all-time high of Rs 150 levels and it is near to 61.8 per cent retracement of the entire move (Rs 20-150).

    Its long-term 55-month average near Rs 70 levels would act as strong support and we expect the stock to rebound from the lower part of the range.

    (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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