Steel Authority of India Ltd. is one of the largest steel producers in India. The company is in the iron and steel production business. SAIL was listed on NSE on 6 July in the year 1995. The stock was like a penny at that time but now sail stock trades near 102 level on NSE and BSE.
The growth of the company was not that good as we have tough competition in this sector by Tata Steel and JSW Steel. Steel being basic infrastructure metal, so its demand in India is robust. The price rise in international markets has benefited the steel industry in India as well. India accounts for about 20% of the world’s iron ore reserve.
Technical Outlook of SAIL:
Seeing the technical analysis charts we see SAIL stock has underperformed the market this year. It has dropped from 265 level to 102 level. So this is a sharp drop in stock price due to selling activity mainly by FII and retail investors.
Sail stock, the price action is below 100 EMA on the weekly chart. So we may see much more downside from current levels. 100 EMA has acted as strong support at the time of the recession of 2008. But the break below that level is an important thing to notice. For the near term, we should be looking for selling opportunities in this stock as long as the stock is trading below 100 EMA on a monthly chart.
We advise traders to keep adding short positions near 111 level for short-term targets as 65 and 55, stop loss for this position should be placed above the 120 level on a closing basis, also note that we are trading on a monthly chart of SAIL. When the target is reached traders can liquidate their short position in SAIL futures contract available on NSE.
Technical indicators are in favor of our trade as most of them are still reporting bearish momentum to continue for some time before we have signs of recovery from the US and European economies. PMI data released from china has also hurt the market sentiments as for the first time these numbers were below 50 level, suggesting a contraction in the Economy.
Metal Sector Leader SAIL, Fundamentals:
Fundamentals of the company suggest we take long positions in this stock. But trading in the direction of the trend we will keep shorting SAIL futures. Fundamentals seem to be attractive for longer-term investments. EPS of the company is at 11, Book value found to be 93. At the current market price, the stock trades at a PE of just 9. So from the fundamental point of view, it will attract long-term investors at every fall in stock price.