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⭐ Ultra Equity Advice #101 | Sell | Expected Profit 12-17% | Arijit Banerjee

OUR RECOMMENDATION

  Sell    TATA STEEL  

CP#399.8
IdeaSELL
Sell Range415 – 404
Target350 – 330
StopLoss*425
Duration20 – 25 Trading Days
Potential Return^12 – 17%
CP#IdeaSell RangeTargetStopLoss*DurationPotential Return^
399.8SELL415 – 404350 – 33042520 – 25 Trading Days12 – 17%

# CP – closing price on Dec 05, 2019
* Maintain recommended StopLoss by daily closing basis.
   Once 1st target hit, reset StopLoss at 375.
^ The returns are calculated based on CP#

COMPANY OVERVIEW

Tata Steel is one of the world’s largest steel companies, manufactures and distributes hot and cold rolled coils and sheets, galvanized sheets, precision tubes, tire based wires, spring wires, wire rods, construction rebars and bearings. The company also offers steel doors, roofing sheets, plumbing pipes, tubes, corrosion-resistance steels etc. Tata Steel is one of the few steel companies that are fully integrated – from mining to the manufacturing and marketing of finished products. In Q2FY20, the company’s net income was dropped by 14.22% to Rs. 34,579.18 crore and Net Profit improved by 33.01% YOY to Rs.4,021 crore.

Stock Data
NSE CodeTATASTEEL
Sectoral IndexNifty Metal
52W High561.65
52W Low320.35
Face Value10
Relative Performance_Tata Steel vs Nifty Metal Index

TECHNICAL OBSERVATIONS (MONTHLY)

  • The entire corrective price action since 2008 till today occurred in a well defined Symmetrical Triangle pattern as highlighted in the adjoining chart.
  • There is a false breakout in mid-2017, when price temporarily moves above the resistance level, but later retreats into the triangle as it started.
  • Presently, the stock price has placed near the upper edge of the sideways triangle. This upper edge also corresponds to the previous intermediate highs, which were tested multiple times since 2008, thereby making it a strong resistance.
Tata Steel Monthly Chart
Tata Steel Monthly Chart

TECHNICAL OBSERVATIONS (DAILY)

  • Technical indicators are currently giving negative signals as Tata Steel closes below the short term (10 day EMA) and medium-term (20 day EMA) moving averages.
  • The momentum oscillator RSI gives trendline breakout, which warns us that the stock has lost its earlier upwards momentum.
  • The recent price development indicates an opportunity for a SHORT trade. Look to Short this stock as per the levels mentioned above.
Tata Steel Daily Chart
Tata Steel Daily Chart

MONEY MANAGEMENT AND TRADING RULES

1)  It’s advisable not to enter/exit beyond the recommended range.
2)  Strictly follow the StopLoss as mentioned. Honour it.
3)  Use trailing StopLoss to retain profits.
4)  Diversify trading capital into our other technical recommendations.
5)  Risk only the money what you can afford to lose. Hedge accordingly.

ANALYST SUMMARY

This research analysis is prepared by Arijit Banerjee, CMT, CFTe. An engineering graduate developed an early interest in Trading since the age of 20. He is a Chartered Market Technician (CMT) accredited by CMT Association USA, the leading global authority of Technical Analysis and also has been honoured by Certified Financial Technician (CFTe) from the International Federation of Technical Analysts (IFTA), USA. His contribution to the market research was recognized by SEBI, the Regulatory Body of Indian financial market and given him the registration number INH300006582 as a Research Analyst. Over the years, he has gained experience in Technical Analysis with a demonstrated history of working in different asset classes. Himself as a trader, he has trained and continues training novice and experienced traders to become successful, confident and profitable in the financial market.

Disclosure

The views expressed herein are based solely on information available publicly/internal data/other sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. The recommendations provided herein is solely for informational purposes and are not intended to be and must not be taken alone as the basis for an investment/trading decision. Trading and investing are subject to market risk and the securities discussed and opinions expressed herein may not be suitable for all investors. To read the full disclosure, please click here.

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