Stock watch: Tata Steel trading near crucial levels

Tata Steel Limited has rallied almost 538 per cent in the last one and half years. However, the stock halted its rally and began to decline from August 2021, when it made a high of 1,534 before moving southwards. In fact, from August 2021 till date, the stock has generated negative returns of 20.32 per cent. In the Nifty Metal Index, Tata Steel Ltd has the highest weightage of 23.56 per cent. Nifty Metal Index too started consolidating from July 2021, and being in range-bound trade, it is difficult to judge its direction.   

Above is the weekly chart of Tata Steel Limited.

Tata Steel Ltd started to underperform Nifty Metal Index which is more evident from its Relative Strength (RS) that began to decline and is currently trading below its 9-Day Simple Moving Average (SMA). This shows weakness relative to its sectoral index. Other technical indicators such as Relative Strength Index (RSI) is presently trading at 51 levels which is below its 9-Day Exponential Moving Average (EMA). Moving Average Convergence and Divergence (MACD) despite being in the positive territory has witnessed a negative crossover in the first week of September 2021. The stock is heading towards the lower part of the Bollinger band and is presently depicting low volatility in the stock. The Commodity Channel Index (CCI), on the other hand, is heading towards the oversold zone.  

Currently, the stock is trading near its significant support level of 1,233 which is also near its critical Fibonacci level of 23.6 per cent (level of 1,229).  

It would be quite fascinating to see how the stock moves from present levels. If it breaks this crucial support level, then it is likely to go more southwards, and chase the level of 1,040-1,049. On the northwards, resistance is placed at 1,427-1,482-1,535 levels. Moreover, breaching these resistances would further decide the direction of the stock.  

At the time of writing the stock was trading at 1,237 levels.