Nifty Metal index enters 2022 after having seen a strong 61% rally in the previous year, taking the index to 5,521 levels. The majority of gains recorded by the metal index, however, came in the first half of 2021 and the latter half saw the index move sideways. Analysts at ICICI Direct believe the index could rebound now, offering fresh entry opportunities. “Nifty Metal index is seen rebounding after taking support around 5200 mark which is the value of long term rising 200-day moving average and 80% retracement of June-October 2021 rally,” a report by ICICI Direct noted.
“The index is seen rebounding after five months of shallow retracement of just 38.2% of its preceding five months strong rally (3072-6312), thus offering fresh entry opportunity in metal stocks with favorable risk-reward setup,” they added. ICICI Direct highlighted that China has cut its reserve requirement ratio by 50 bps to boost its economic growth. “This cut in reserve requirement ratio for major commercial banks is effective from December 15, 2021. This step to cut reserve requirement ratio augurs well for metal demand in general,” they said.
Target: Rs 116 | Stop loss: Rs 91
National Aluminium Company Limited’s share price has rallied 14% in the last one month to now trade at Rs 101 per share. Analysts said that the stock generated a breakout above its four-year range in October last year, signaling a structural turnaround. “The entire up move since October 2020 is well channeled signaling sustained demand and incremental buying opportunity at the lower band of the rising channel. The stock has recently rebounded taking support at the lower band of the rising channel thus offering fresh entry opportunity,” they added.
On the charts, the stock has support at Rs 92 levels as it is the confluence of the rising 100 days EMA and the lower band of the rising channel in place since October 2021. For the stock to reach the target price it will have to rally 16% from current levels.
Vardhman Special Steel
Target: Rs 302 | Stop loss: Rs 233
Vardhman Special Steel share price rose a massive 120% in 2021, helping investors multiply their investment in the stock. In the last one month along the stock has jumped more than 8%. “Within the metal space, Vardhman Special Steel has relatively outperformed its peers. Currently, the stock has formed a higher high-low after consecutive seven weeks decline on the back of rising volumes, indicating resumption of the primary uptrend,” said ICICI Direct. Support for Vardhman Special Steel is seen at Rs 233 as it is the 61.8% retracement of the current up-move. The target price pimples 18% upside potential.