Tata Steel shares hit 52-week high for second session but overbought on charts; can the rally sustain?

Shares of Tata Steel Ltd hit a fresh 52 week for the second session amid a rally in the broader market today. The Tata Group stock has gained for the sixth consecutive session. The Tata Steel stock has risen 13.64% in the last six sessions. The Sensex stock, which ended at Rs 116.90 on August 25 hit a 52 week high of Rs 132.85 in the current session. The stock hit a 52 week high of Rs 128.60 on September 1, 2023.  

In the current session, the Tata Group’s metal stock hit an intraday high of Rs 132.85, rising 4.52% in early deals on Monday. The metal stock has gained 11.03% this year and risen 25.44% in a year. Total 26.01 lakh shares of the firm changed hands amounting to a turnover of Rs 34.18 crore. Market cap of the Tata Group firm rose to Rs 1.61 lakh crore.      

In terms of technicals, the relative strength index (RSI) of Tata Steel stands at 72.6, signaling it's trading in the overbought territory. The stock has a beta of 1.2, indicating high volatility in a year. Tata Steel shares are trading higher than the 5 day, 10 day, 20 day, 30 day 50 day, 100 day, 150 day and 200 day moving averages.         

Here’s a look at what technical analysts said on the outlook of the Tata Group stock.      

Aditya Gaggar Director of Progressive Shares said, “Tata Steel Ltd has given a breakout from the Symmetrical Triangle Formation in the monthly time frame. The leading momentum indicator RSI replicates price activity while the trend-following indicator MACD has given a positive crossover and ADX also suggests building up the momentum. Recently, the stock has given a breakout from another pattern known as the Cup and Handle formation. The stock has given a breakout from the Symmetrical Triangle Formation. RSI oscillator replicates price activity. The stock is about to start its trend as ADX stands at 19.75. As per symmetrical triangle breakout, the target comes to Rs 172. One can add the stock on declines to Rs 117."  

Deven Mehata,  Equity Research Analyst, Choice Broking  said, "The stock showcases compelling technical dynamics that merit closer examination. The stock has effectively carved out a formidable support level at Rs 121 which was a prior resistance, a key price point that has proven its significance by acting as a barrier against downward price action. Tata Steel's position above essential moving averages underlines its bullish sentiment, underscoring the positive investor sentiment towards the stock. Additionally, the Relative Strength Index (RSI) comfortably rests at 65 levels, affirming the stock's underlying strength and its capacity to sustain its current trajectory. Based on the above technical analysis Investors holding Tata Steel can keep trailing stop losses as stock can further move towards Rs 135 levels. Also investors should find a buying opportunity on the dips."

Abhijeet from Tips2trades said, "Tata Steel is bullish but also overbought on the Daily charts with next resistance at Rs 129.65. Investors should book profits at current levels as a daily close below the support of  Rs 123 could lead to a target of  Rs 114.5 in the near term."  

Prabhudas Lilladher has initiated coverage on the stock with a buy call.     

"We initiate coverage on Tata Steel with 'Buy' rating and SOTP based target price of Rs 137. We believe Tata Steel India is well placed to capitalise on strong volume growth expected in domestic steel markets, while Tata Steel Europe (TSE) is at an inflection point as UK decision is nearing," said the brokerage.     

Mileen Vasudeo, Senior Technical Analyst at Arihant Capital Markets has assigned a target price of Rs 147-166 with a buy call. Stop Loss can be fixed at Rs 116. 

“On the daily chart of Tata Steel, we observe a rounding base formation coupled with a strong bull candle with high volumes. This suggests that momentum on the upside is likely to continue. The stock is outperforming the benchmark indices, that is, it has higher relative strength. Even the momentum indicator MACD is positively poised. Hence, one can buy the stock at current levels with a stop loss of Rs 116 for the target of Rs 147-166 levels in the next couple of months,” said Vasudeo.  

Tata Steel on July 24 reported a 92% year-on-year decline in its Q1 consolidated net profit (attributable to owners of the company) to Rs 633.95 crore against a profit of Rs 7,764.96 crore in the year-ago period. Consolidated net profit slipped 63% from Rs 1,704.86 crore in Q4FY23.   

Disclaimer: This article is for informational purpose only. Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today. Please consult your financial advisor or a qualified stock market expert before taking any position in the mentioned stock or stocks. Business Today will not be responsible for losses arising from trading or investing in these stocks. 

 

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