Tata Steel shares recovered 33% from 52-week low in a year; what's next?

Shares of Tata Steel Ltd have recovered 33% from their 52 week low in a year. They hit a 52 week high of Rs 137.65 on December 18, 2023 and a 52 week low of Rs 101.60 on December 26, 2022. In comparsion, the benchmark Sensex gained 17.08% in a year. Tata Steel stock has gained 13% in 2023, leaving short-term investors guessing about the outlook of the stock. On the other hand, the Tata Group stock delivered more than double the YTD returns in a year. The 28.76% rally in a year signals that investors earned moderate returns during the period.

In the current session, Tata Steel stock ended 1.27% higher at Rs 135.20. Tata Steel shares rose to an intraday high of Rs 136.10 against the previous close of Rs 133.50 on BSE. Tata Steel stock opened higher at Rs 134.95 on Tuesday. During the session, the stock hit an intraday low of Rs 134.10. Market cap of the firm rose to Rs 1.66 lakh crore. Total 19.05 lakh shares changed hands amounting to a turnover of Rs 25.80 crore on BSE.

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Tata Steel stock has a one-year beta of 0.3, signaling low volatility during the period. In terms of technicals, the relative strength index (RSI) of Tata Steel stood at 59.8, signaling it's trading in the neither in the overbought nor in the oversold zone. 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.

Tata Steel shares have rallied 117.06% in three years and risen 163% in five years.

Abhijeet from Tips2trades said, "Tata Steel is bullish but also overbought on the Daily charts with next resistance at 152. Investors should book profits at current levels as a daily close below the support of Rs 133 could lead to a target of Rs 118 in the near term."

Aditya Gaggar, Director of Progressive Shares said, "With a higher top higher bottom formation, the stock is in the primary uptrend and recently, it has given a breakout from a V-shaped pattern which was confirmed with a positive crossover in MACD. A reading of 29 in ADX is also indicating the presence of a strong underlying trend. As per the pattern breakout, the target arrives at Rs 155."

Tata Steel logged a loss of Rs 6,511 crore in the September 2023 quarter against a net profit of Rs 1,297 crore a year ago. The steelmaker's total revenue from operations came at Rs 55,681 crore against Rs 59,877 crore reported in the year-ago period.

Domestic brokerage firm YES Securities is bullish on Tata Steel. While the company's Europe business is undergoing transitions, its India business is gaining strengths, it said.

The brokerage said that Tata Steel was rightly positioned in the Indian steel space and growing strongly with upcoming capacities. It has initiated ADD rating on Tata Steel shares for a target of Rs 153.

JM Financial has assigned a target of Rs 150 to the Tata Steel stock post Q2 earnings.

"India business reported a marginal decline QoQ in EBITDA/tonne to Rs 13.4 k/t on back of lower realizations, partially offset by lower coking coal cost. Europe continued to report EBITDA loss of $167/tonne vs. loss of $96/tonne in Q1 due to relining of BF in Netherlands. The company reported net loss of Rs 6200 crore after providing for one-off provisioning (UK) of Rs 6800 crore. Net debt during the quarter increased to Rs 77,000 crore (up Rs 5300 crore QoQ) on account of weak performance," said the brokerage.

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