Stock Buzz: Time to cash out of Tata Steel in the short term

ET Now’s Nikunj Dalmia shares his views on Tata Steel. Excerpts:

Tata Steel, the buzzword on the street is it is time to get out of Tata Motors which has appreciated very smartly and it is time to revisit Tata Steel even at these levels despite a recent and a strong run up.

Lots of HNI investors are of the view that the incremental news flow from Corus is likely to improve and in next 12 to 18 months, you will get a lot of constructive news flow from Corus where they could look at selling their non-core assets in order to reduce the debt. That is the basic assumption.

Domestically also, realisations for Tata Steel are set to go higher since the Mittals and the Poscos of the world have not expanded capacity in Indian steel sector. Whenever the economy will turn around, Tata Steel is nicely positioned to take benefit of that economic upturn.

The stock also is exhibiting some action. Technically, it is looking strong. The open interest built up is on the long side. Local mutual funds are buying into that stock. It will benefit because of the import substation trade and the data from China has been stable.

There are couple of tailwinds which are at play, an under owned stock where the visibility in the medium term is likely to improve. On the flipside for Tata Motors, the sense is that the stock already has seen a run up.

So, for a risk taker, risk premium now lies in buying into Tata Steel and maybe it is time to cash out of Tata Steel at least in the short term.