Shares of Tata Steel have witnessed a heavy sell-off in 2022 as in year-to-date time, Tata Steel share price has fallen from around ₹1142 to ₹885 apiece levels, logging around 22 per cent dip in this time frame. The stock closed today at ₹885.25 with a downside gap of 1.64 per cent and 11,200,063 shares traded in the day. ICICI Securities, a brokerage, has issued a buy call today for the stock with a target price of Rs. 1045, a buying range of Rs. 875-895, and a stop loss of Rs. 799. According to the brokerage, the stock's upside will be achieved within 3 months of the target frame.
As per ICICI Securities, “the Nifty has remained volatile since the beginning of the May series along with broader markets. From the metal space, Tata Steel witnessed a significant correction on the back of a sharp decline in metal prices amid fear of global recession. However, after the correction of almost 45% from the top we feel currently it is in a pullback mode as it reverted from its Put base. We believe the recent momentum seen in the stock will be followed by fresh longs in coming sessions."
“Leveraged positions in the stock have declined noticeably till the current series as stock prices remained in a declining trend. However, since the early July series, the stock has been witnessing long accumulation where OI has risen marginally. The stock has been able to trade above its resistance level of ₹900, suggesting further upsides. The stock has been witnessing accumulation near the support level of ₹840-850. With continued Put writing in 800 and 860 strikes, we expect downside risk to be limited. On the other hand, Call OI of 860 and 880 strike is already witnessing closure of positions suggesting positive bias in the stock. These positions are expected to aid it in breaking the option range on the higher side," the brokerage has said in a note.
“The stock has seen one of the notable delivery based action around ₹900 in the last couple of weeks. Since then, it has been crawling northwards with early signs of the stock making a base at the support area. The stock is trading near its long term mean-2*sigma levels. Currently, this level is placed near ₹810. We believe sustainability at current levels itself should provide momentum in the stock towards our target levels of ₹1045," said the research analysts of ICICI Securities.
“In November 2020-August 2021, the stock had witnessed an impulsive up move towards ₹1500. Since then, it has largely seen time and price based correction. This recent decline towards ₹800-850 has given another opportunity to go long on the stock," said the brokerage.
Tata Steel is a company with a high dividend yield and has shown a positive profit increase of over 76 per cent CAGR over the past five years. With a book value per share of Rs. 958.50 for Tata Steel, the stock is now selling at a low price to book value (P/B) of 0.92 times its book value.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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ABOUT THE AUTHOR
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Published: 08 Jul 2022, 06:30 PM IST
