Tata Steel may test Rs 588: Manghnani

Anil Manghnani of Modern Shares & Stock Brokers is of the view that below Rs 634, Tata Steel may test Rs 588.

Manghnani told CNBC-TV18, "If you look at the metal index over the last 2-3 months it’s slowly been getting weaker and weaker. I think if you leave out the other stocks, which are already been beaten down and just focus on Tata Steel and Sterlite, it was expected that sometime or the other this was going to give in for two reasons one is with the rest of the market having corrected so much, and even the other steel and metal pack these were the only two stocks relatively in terms of performance had probably only down 20% from their recent highs. So I think somewhere down the line when people had to offset or balance their portfolios, where they have taken a pounding and book profits somewhere, where they are making which is finally coming down to Sterlite and Tata Steel."

He further added, "What happens in the cycle of asset classes first bonds correct, then it is equity and last it’s commodity, so may be the way crude is moving up Cairn is not moving up, may be people across the board are feeling that the commodity cycle is somewhere near the peak. I think this is an anticipatory sell off that something or the other in the commodity has to cool off and then these stocks would correct. So I think market is expecting in anticipation and given they had a trigger yesterday with steel producers being told to cut their prices of some of those pipes by 10% may be that was the trigger. Level wise if Rs 634 is broken on Tata Steel which is a major trendline then it is headed towards Rs 588 and Sterlite is now headed closer to Rs 595."