Buy SAIL, sell Hindalco: Mitesh Thacker

In an interview with ET Now, Mitesh Thacker, Technical Analyst, miteshthacker.com, shares his views on metal stocks.

If indeed there is a trade that can be initiated on any of the metal boys, be it a Hindalco, Jindal Steel, Tata Steel or some of the mid-sized companies as well, Hindustan Zinc for example?

Very clearly the trend is on the downside. We have seen metals underperform. The other thing is that you should not forget that the view on dollar index, which is somewhere a basket of currencies and commodities is very positive, so I would say trade definitely can be initiated at least in these stocks, which are giving fresh breakdowns. When you have a sector, which is enjoying a good downtrend, you then keep a watch individually on stocks and any stock, which is giving sell signals or giving fresh breakdowns could be a good candidate. In that sense, SAIL is appearing to break below the support at about 106-108. If you just go back to the history of Steel Authority of India for the last number of weeks, we have seen the stock price make intermediate lows at about 106-108 odd levels. We have seen the bounce back happening to 115-120 on the upside, that consolidation is now breaking on the downside, so SAIL directly comes to my mind.

Hindalco has been clearly in a downtrend for sometime now. It gave a pullback to about 135-137, a fresh shorting can be done but in Hindalco, I would be slightly cautious because the downtrend has been established since the levels of about 150+ odd levels, so if somebody is shorting fresh today, I would keep a very tight stop at today’s high and then go short over here. The downtrend is far from over, 110-108 odd could be tested very easily in this stock in the near future.