Stock to watch: Tata Steel

The stock of Tata Steel has broken out from its falling trendline with heavier volumes on the weekly chart.

TATA Steel Limited is a diversified steel producer, engaged in the business of steel making, including raw material, and finishing operations. With a market capital of about Rs 1,50,000 crore, it is one of the leading company in its sector.

The stock of Tata Steel has broken out from its falling trendline with heavier volumes on the weekly chart. Moreover, it had crossed above its prior swing high. On the monthly timeframe, the stock has formed a strong bullish candle and is trading at its month’s high. In the past few weeks, the rising volumes have been recorded which demonstrates larger participation in the stock. The stock is nearly 1% up and one of the top gainers among the Nifty stocks. With this, the stock is trading above 200-DMA and has turned bullish for the long term. The technical parameters indicate bullishness, with 14-period RSI inching over 65. The trend indicator ADX is rising steadily which suggests a strong uptrend of the stock. Moreover, the MACD line is above the zero line and signal line, indicating the bullish trend. Along with this, the stock trades above all the key moving averages. This structure pretty much defines the bullish sentiment of the stock.

Analysing the Futures & Options data, we find that Put options of 1240 and 1260 have been aggressively written today, indicating a bullish sentiment among the market participants. Along with this, the calls have been unwound at the strike prices of 1180, 1200, 1220 and 1240. Moreover, a long buildup has been done at 1280 strike price.

Recently, Tata Steel came out with better-than-expected results which has attracted long term investors. The company has been posting good number in the past few years and is a good candidate for long term investing as well.

Considering the above factors, Tata Steel looks bullish in near future. Positional traders can consider this stock for the short to medium term and can expect decent returns.