Technical Check: 80% in a year! This stock from metal space is on verge of breakout above 500

Hindalco Industries Ltd. rose by about 80 per cent in last one year compared to 27 per cent rise seen in the Nifty50 in the same period.

The stock from the metal space rose to a 52-week high of 551 on 18 October but quickly lost momentum. It fell more than 20 per cent to hit a low of 407 recorded on 29 November before bouncing back.

Hindalco with a market capitalization of more than Rs 1.1 lakh crore is coming out of the corrective phase. A close above Rs 500 could take the stock towards its 52-week high of 551, suggest experts.  

Hindalco Industries Limited is the metals flagship company of the Aditya Birla Group. A US$18 billion metals powerhouse, Hindalco is an industry leader in aluminum and copper.

“Metals have remained laggards for the past 6 months, though on a yearly scale they have remained top performers. Hindalco’s chart belongs to the sector which is slowly coming out of a corrective phase,” Pushkaraj Sham Kanitkar, VP (Equities) at GEPL Capital, said.

“This in a way indicates that the uptrend for the sector is still intact and being cyclical at that provides a longer trajectory spanning a year or more for the stocks to move to a higher trajectory,” he said.

The stock is trading well above the short- and long-term moving averages of 30,50,100 and 200-DMA which is a positive sign for bulls. The 200-DMA is currently placed at 423.

Technically, the low of Rs 407 recorded in November was close to the 200-DMA then, which is depicted by the fluorescent lemon line in the chart. This in a way further substantiates the bullish outlook in the chart.

“The down leg has met with next level of uptick wherein prices crossed above the 50% retracement level around 480. In the last trading session, we saw a bullish momentum uptick with volumes moving in tandem with the prices,” added Kanitkar.

A daily close above 500 levels will further confirm the breakout from the retracement with possible continuation to all-time highs, advises Kanitkar.

An initial stop loss should be placed somewhere below 462 which is the 100 DMA and can be trailed as the prices move up, he added.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)