Tata Steel shares hit seven-month high; time to buy, sell or hold?

Shares of Tata Steel Ltd hit a seven-month high amid a rally in the broader market today. The stock closed at Rs 122.05 on February 1, 2023 and hit a high of Rs 122.60 in the current session, implying a seven-month high level today. Tata Steel shares are also in an uptrend in the last four sessions. The Tata Group’s metal stock has risen from the close of Rs 116.90 on August 25, 2023 to an intraday high of Rs 122.60 in the current trading session, gaining nearly 5% during the period. The current phase of rally has brought the stock closer to the 52-week high of Rs 124.30 touched on January 19, 2023.

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The Tata Group’s metal stock was trading at Rs 122.20 in today’s session on BSE. The metal stock has gained 2.60% this year and risen 13% in a year. The stock has delivered stellar 188.49% returns in the last three years. Total 25.66 lakh shares of the firm changed hands amounting to a turnover of Rs 31.23 crore. Market cap of the Tata Group firm rose to Rs 1.49 lakh crore.

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In terms of technicals, the relative strength index (RSI) of Tata Steel stands at 56.6, signaling it's neither trading in the overbought nor in the oversold territory. The stock has a beta of 1.2, indicating high volatility in a year. Tata Steel shares are trading higher than the 5 day, 10 day, 20 day, 30 day 50 day, 100 day, 150 day and 200 day moving averages.

Here’s a look at the outlook of the Tata Group stock.

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Progressive shares in a report said, "The stock has given a breakout from the Symmetrical Triangle Formation. RSI oscillator replicates price activity. The stock is about to start its trend as ADX stands at 19.75. As per symmetrical triangle breakout, the target comes to Rs 172. One can add the stock on declines to Rs 117."

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Prabhudas Lilladher has initiated coverage on the stock with a buy call.

"We initiate coverage on Tata Steel with 'Buy' rating and SOTP based target price of Rs 137. We believe Tata Steel India is well placed to capitalise on strong volume growth expected in domestic steel markets, while Tata Steel Europe (TSE) is at an inflection point as UK decision is nearing," said the brokerage.

Riches Vanara, Technical and Derivatives Analyst, StoxBox has assigned a sell call with a target price of Rs 112-108. One can fix the stop loss at Rs 123.

"Tata Steel is trading in an ascending triangle pattern since June month and it has reversed facing resistance from the upper end of the said pattern and a follow up selling candle is seen. We feel it’s a sell candidate as MACD indicator is also showing some sign of bearishness. Hence, we recommend to sell at current levels and around Rs 119 for targets of Rs 112 and Rs 108 with stop above Rs 123," said Vanara.

Mileen Vasudeo, Senior Technical Analyst at Arihant Capital Markets has a sell call on the stock. He has assigned a target price of Rs 107-102 with a stop loss of Rs 122.

“Tata Steel is making a lower-top lower-bottom formation on the daily chart, which is a sign of weakness. The stock has a good support at Rs 115 level, its 50-day SMA. If this level is breached, the stock may see downside momentum. The momentum indicator viz MACD is negatively poised. One can sell the stock at current price with a stop loss of Rs 122 for a target of Rs 107-102 levels in the couple of weeks,” said Vasudeo.

Abhijeet from Tips2trades said, "Tata Steel is bearish on the daily charts with strong resistance at Rs 123. A close below the daily support of Rs 117 could lead to Rs 111 in the near term."

Tata Steel on July 24 reported a 92% year-on-year decline in its Q1 consolidated net profit (attributable to owners of the company) to Rs 633.95 crore against a profit of Rs 7,764.96 crore in the year-ago period. Consolidated net profit slipped 63% from Rs 1,704.86 crore in Q4FY23.