Metal stocks shine, index up from 61.8 per cent retracement support

Indian benchmark indices have bounced back after three consecutive downticks, majorly due to the Metal stocks. Metal index, which forms 4 per cent of the Nifty 50 index, surged as much as 1.6 per cent and pulled Nifty to trade in green with marginal gains. Jindal Steel which forms 3.9 per cent of the Nifty Metal index was the top metal gainer with 5.9 per cent gains at 14:45 hours. Welcorp and Sail followed with 3-5 per cent upside. Even, Nifty 50 metal stocks like Hindalco, Tata Steel, Vedanta too surged more than a per cent.

Nifty Metal index had given a multiple point downward sloping trendline breakout on the daily time frame. The breakout was at 3,905 on April 19 with volume spurt and RSI quoting at 66 at the time of breakout. The stock couldn’t sustain the breakout and retreated from the next day itself. Recently, the index consolidated near 61.8 per cent retracement of the prior upward rally. The said level also acted as 200-day EMA support for the index.

In case the index continues to see some more upside, we hold 3,740 followed by 3,820 as the immediate resistances while 3,670 followed by 3,570 is expected to act as the supports if index retreats following its lower tops and lower bottom pattern since it gave a trendline breakout whipsaw.