Tata group’s multibagger stock RSI above 90: Back-to-back fourth upper circuit; Is it time to book profits or buy on dips?

With an impressive 86 per cent surge over the past week and a staggering 192 per cent multibagger return over the last year,

Indian benchmark indices found themselves besieged by selling pressure as both the Nifty and Sensex endured a continued descent, with the former shedding over half a percent. Meanwhile, a sea of red engulfed the broader markets, with the Nifty Mid-Cap and Small-Cap indices plummeting by 1.76 per cent and 2.92 per cent, respectively. The advance-decline ratio painted a bleak picture, showcasing one of the most dismal performances in recent memory, as a mere 400 stocks traded in the green, while 1840 languished in the red.

Amidst the turmoil gripping the broader markets, there shines a singular stock, steadfastly locked at its upper circuit limit of 10 per cent, marking its fourth consecutive upper circuit. This remarkable performer is none other than TRF Ltd., which has soared to a fresh 52-week high.

TRF, a member of the illustrious Tata Group, boasts Tata Steel Ltd. as its majority stakeholder, with a 34.11 per cent holding as of March 31, 2023. Specializing in material handling, TRF plays a crucial role in fulfilling orders from TSL. Situated in close proximity to Tata Steel's plant and sourcing raw materials directly from TSL, TRF enjoys a formidable competitive edge over external vendors.

The stock has witnessed a substantial surge following the approval of a Scheme of Amalgamation between Tata Steel Ltd. and TRF Ltd., aimed at harnessing synergies and augmenting stakeholder value. Recent quarters have seen TRF's business performance thrive, propelled by substantial support from Tata Steel, including order placements and capital infusion, alongside the company's initiatives to optimize costs and assets, and improve debtor collections.

However, in a surprising turn of events, the Board of Directors announced on February 6, 2024, their decision to withdraw from the Scheme, alongside Tata Steel's concurrence with this resolution.

Notably, on the daily chart, the 14-period Relative Strength Index (RSI), a widely-tracked indicator for assessing overbought and oversold conditions, surged above the 90-level post-announcement, marking only the third instance in the stock's history.

With an impressive 86 per cent surge over the past week and a staggering 192 per cent multibagger return over the last year, TRF Ltd. stands out as a beacon of resilience amidst the tumultuous currents of the market.

Disclaimer: The article is for informational purposes only and not investment advice.