Three big Metal stocks, Seasonal variation: Special feature

Published October 24, 2018

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Among the worst performing sectoral indices, Nifty Metal index stands at fifth place with a correction of over 22 per cent since its high in January this year.
In comparison Nifty 50 has fallen a little under 14 percent from its high this year.
Of the metal stocks that are listed on Nifty 50, Tata Steel Limited has lost over 22 per cent in the past one year, Hindalco Industries Limited has given up close to 19 per cent, while JSW Steel being an exceptional with a gain of over 33 per cent.
But it would be interesting to see how these stocks might turn out in the coming months.

We look at some special charts today, Seasonal prediction from today's date.
This is a special feature on our website that offers a broader view of how the stock has developed on average in the last 10 years.

JSW Steel Limited (JSWSTEEL.NS) Close: 347.50

JSW Steel Limited is in a rising trend channel in the medium term. Rising trends indicate that the company experiences positive development and that buy interest among investors is increasing.  Currently, the stock is testing the support at rupee 344, which may give a postive reaction.
The stock has support around 317 and resistance at 416. In the past couple of weeks, volume has been high on days with falling prices and low on days with rising prices, which weakens the stock in the short term.  The stock is overall assessed as technically slightly positive for the medium term.

Now to look at the Seasonal Variations option, that is average price development in the past 10 years, in the period from three months before to six months after today's date shown by the the blue line. The black line is actual price development in the past three months. Shaded areas are one and two standard deviations.
As per the graph the stock performed well in the next six months from today's date with maximum return, around 12 per cent here, coming in the month of April.

On the other hand, the average development per month in the last 10 years for JSWSTEEL suggests that the stock has gained around 5.30 per cent in October and 3.54 per cent in December, while it lost about 2.82 per cent in November.
Investtech's outlook (one to six months): Weak Positive

Hindalco Industries Limited (HINDALCO.NS) Close: 219.50

Hindalco Industries Limited is in a falling trend channel in the medium term. This shows that investors over time have sold at lower prices to get out of the stock, and indicates negative development for the company. The stock has short term support at 217 rupees. If the price breaks and closes below this level, it may lead to fresh selling and HINDALCO can tumble down to 200 levels. There is resistance at 230.

Seasonal Variation suggests that per cent gains peaked in December before falling marginally below zero in February-March, and finally rising again by the end of the next six months with gains of over 5 per cent.

Average development per month in the last 10 years shows that HINDALCO had the second highest per centage gains in the month of October, after March.
Investtech's outlook (one to six months): Negative

Tata Steel Limited (TATASTEEL.NS) Close: 545.60

Tata Steel Limited is in a falling trend channel in the medium term. This shows that investors over time have sold at lower prices to get out of the stock.
The stock tested the 625 rupees level in September and found resistance as sellers came in to take the price down again. The next level of support is at 500 while resistance is around 570 rupees.
In the longer term chart, the stock is very close to its support of 540. A close below this level may prove to be more negative for the stock in coming weeks or months.

Seasonal Variation suggests a similar story as in other two stocks. In the coming six months, the stock goes above and below the zero line before settling to around 5 per cent of gain in April. Average development per month in last 10 years shows negative return in November while most positive in October and December.
Investtech's outlook (one to six months): Negative

The analyses are based on closing price as per October 23, 2018. Maintaining proper stop loss is always recommended.