Metal stocks in focus this week

Representative Image

Tata Steel's strong performance and a stock split announcement could help metals regain their mojo this week as smart positional trades went long in the previous session while some deep-pocketed HNIs sipped beaten down metal shares last week.

India’s largest steelmaker on May 3 reported a consolidated net profit of Rs 9,835.12 crore for the quarter ended March 2022, a 37.3 percent growth over Rs 7,162 crore profit logged in the year-ago period, beating analysts' estimates. The firm also announced a stock split at 10:1.

The company reported a 39 percent year-on-year (YoY) growth in consolidated revenue at Rs 69,323.50 crore during the fourth quarter, with Tata Steel India showing a 34 percent growth YoY at Rs 36,681 crore and Tata Steel Europe clocking a massive 53 percent growth at Rs 26,389 crore in the same period.

A look at National Aluminium's and Hindalco's daily charts shows that the two stocks have fallen about 20 percent and 39 percent, respectively, from their most recent highs seen in early April. The fall has outpaced the 5.9 percent drop in the Nifty and a 6.7 percent correction in the Nifty metals Index.

Nifty chart

Nifty Metal index chart

Both National Aluminum and Hindalco are trading near their 200-day moving averages—an area often described as a buying zone by technical chartists.

NALCO Chart

Hindalco chart

The global metals space has seen the maximum profit-booking as an impending tightening of liquidity by the US Federal Reserve and price controls by various governments and companies to rein in inflation affected sentiment.

Frontline metal shares seem to have given up froth and are now looking tempting for long positional trades, a broker said.