Tata Steel, Jindal Steel, JSW Steel: How should you trade these metal stocks

Domestic stock indices settled lower on Thursday after the RBI's monetary policy outcome. The apex bank asked banks to maintain a 10 per cent incremental cash reserve ratio (ICRR) from August 12, which weighed on the market sentiment. The BSE Sensex plunged 307.63 points, or 0.47 per cent, to settle at 65,688.18.  The NSE Nifty dropped 89.45 points, 0.46 per cent, to 19,543.10.

Select metal stocks such as Tata Steel, JSW Steel, Jindal Steel & Power (JSPL) are likely to be in focus today. Here is what Riches Vanara, Technical and Derivatives Analyst at StoxBox has to say on these stocks ahead of Friday's trading session:

Jindal Steel & Power | Buy | Target Price: Rs 700-725 | Stop Loss: Rs 644

Jindal Steel is making higher high- low formations since June. It has found a good support at 10- and 20-EMAs on the daily chart. Recently, the stock  saw a good bounce from its 10-daily EMA on an above-average volumes, which is a bullish sign. The stock is also outperforming relatively in comparison to Nifty and that its 14-period RSI indicator is consolidating between 55 and 65 levels, which suggests the momentum is intact. One can buy the stock at current level or at pullback towards Rs 662, with targets of Rs 700 and Rs 725, respectively. One can place stop loss below Rs 644.

Tata Steel | Sell | Target Price: 116-112 | Stop Loss: Rs 126.50

Tata Steel is trading in an ascending triangle pattern since June. It has reversed facing resistance from the upper end of the said pattern. It will take some time, before this stock breaks out on the upside. The MACD indicator is showing signs of bearishness. One can sell the stock at current levels and around Rs 121 and Rs 123 levels for targets of Rs 116 and Rs 112, respectively. Keep a stop loss above Rs 126.50 level.

JSW Steel | Buy | Target Price:  Rs 855-880 | Stop Loss: Rs 795

JSW Steel broke out of an ascending triangle pattern on the weekly chart in July. It was trading well above the pattern with positive bias, but in a narrow range for five weeks. Now that the stock has broken above the consolidation phase, with breakout also seen on the relative strength chart in comparison to Nifty. The momentum indicator MACD is trading well above zero line and is trending strong. It's a buy candidate on a dip towards Rs 816 for targets of Rs 855 and Rs 880 levels, respectively. One can keep stop loss below Rs 795 level.

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

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