Gladiator Stocks - Jindal Stainless : Two years consolidation breakout signifies resumption of primary up trend...

Strategy

Buy Jindal Stainless in the range of Rs. 53.00-57.00 for target price of Rs. 64.00 with a stop loss of Rs. 49.00. Time Frame: Six months

Technical View

The share price has logged a resolute breakout from two years base formation (Rs. 23-53) backed by faster pace of retracement as stock entirely retraced past seven weeks decline (Rs. 53-39) in just single week. Multi year consolidation breakout supported by faster pace of retracement, signifies resumption of primary up trend, auguring well for next leg of up move

Key point to highlight during ongoing up move off March low (Rs. 21) is that, the stock has been trading in a upward sloping channel indicating elevated buying demand. In the process stock has closed above 200 weeks EMA for the first time in two years, indicating rejuvenation of up trend

The two years consolidation breakout has been backed by highest weekly volume since January 2020, highlighting larger participation

On the oscillator front, weekly RSI resolved out of three years resistance of 68, indicating reviving upward momentum

Therefore, we expect the stock to accelerate ongoing momentum and head towards Rs. 64 levels in the coming months as it is upper band of rising channel placed at Rs. 66 coincided with 161.8% external retracement of CY20 decline (Rs. 47-21), at Rs. 63

Fundamental View

Jindal Stainless Steel (JSL), part of the OP Jindal group, is India's largest stainless steel producer. The company has an installed capacity of 1.1 Million tonnes (MT) and its plant is located in Jajpur, Odisha. JSL also has a 250000 tonnes per annum (tpa) Ferro alloy plant and a 264 MW captive power plant. The company is engaged in business of procuring stainless steel scrap, chrome ore, nickel and other alloy elements from market and convert them into varied stainless steel products. Company's business operations are primarily involved in manufacturing of flat stainless steel products.

JSL has ~25% market share in the overall domestic stainless steel market and its product basket includes slab, hot rolled annealed pickle coil, Cold rolled annealed pickle coil and plates. Around 20% of JSL's total volume is exported (majorly to Europe and South-east Asia), while the balance 80% of the overall volume caters to the domestic requirements. The company has a healthy logistics infrastructure, which includes in-house railway sliding, along-with close proximity to ports providing strong support to overall operations.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GladiatorStocks_JindalStainless_Oct20.pdf

Shares of JINDAL STAINLESS LTD. was last trading in BSE at Rs.56.6 as compared to the previous close of Rs. 53.55. The total number of shares traded during the day was 103103 in over 840 trades.

The stock hit an intraday high of Rs. 57.55 and intraday low of 51.25. The net turnover during the day was Rs. 5533602.

Source : Equity Bulls

Keywords