Nifty Metal Index Stabilizing

JC Parets
June 27, 2019

The Nifty Metal Index has been dead money for a while, but we are finally starting to see signs of stabilization within the space.

While there aren't a lot of actionable trades right now, we think that rotation into this area is a positive for the broader market and will offer some great setups on the long side in the second half of this year.

First, let's take a look at the Nifty Metal Index, which has been consolidating after breaking support near 3,055. We've seen improvements in the Nifty Commodities and Infrastructure Indexes, but we've yet to see that same improvement in Metals.

With that said, prices have put in their first higher low and are attempting to break back above broken support...which would be a decent start.

Click on chart to enlarge view.Here are some of the largest names stabilizing themselves and beginning to work higher.

Vedanta Ltd. is breaking the downtrend line from its 2018 highs and is back above support near 173.

Hindalco held its recent lows as downside momentum waned and is now looking to test the downtrend line from its 2018 highs.

National Aluminum has stabilized well above its downside price objective as momentum diverges.

JSW Steel Ltd. made new marginal lows as momentum made a much higher low. Again, a significant divergence that suggests selling pressure is weakening.

What we'd like to see is for prices to break out above their respective resistance levels as momentum transitions to a bullish range by getting overbought, as well as their 200-day moving averages beginning to flatten out and begin rising.

These are changes that generally happen over weeks and months, but I think it's worth noting the early improvements we're seeing. For now, we're not taking any trades in the space as it's still messy, but we'll be keeping a close eye on it in the coming quarters.

Thanks for reading and let us know if you have any questions!

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Allstarcharts Team

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