JSW Steel on the verge of a major breakout as Nifty Metal outperforms; Investors take notice

One stock from the metal sector is on the verge of a significant technical breakout after a consolidation period of over 100 weeks and has caught the attention of investors. It has surged over 5% in just the first half of this week, surpassing the total volume of the previous week. 

In the midweek trading session, Nifty opened positively and surged to a new all-time high. Currently, it is trading near the day’s peak, boasting gains of nearly 1%. Notably, Nifty Metal has outperformed the benchmark index with an impressive rally of over 1.35% in today’s session. 

That stock is JSW Steel Ltd, a holding company involved in the production, distribution, and trading of iron and steel products. Its diverse product range includes hot rolled and cold rolled coils and sheets, galvanized coils and corrugated sheets, galvalume products, steel doors, and light steel building solutions. Operating under well-known brands such as Vishwas, Vishwas+, Colouron, Colouron+, Pragati, Neosteel, Galvos, Galveco, Trusteel, and Avante, JSW Steel was founded by Om Prakash Jindal on March 15, 1994. The company is headquartered in Mumbai, India.

JSW Steel has ambitious plans to expand its crude steel capacity from 18 MnTPA in FY20 to 45 MnTPA within the next decade. In 2021, it achieved a major milestone by acquiring BPSL, becoming India’s largest steel producer. Furthermore, JSW Steel owns the largest steel plant in the country, boasting a capacity of 12 MnTPA.

From a technical standpoint, plotting a trendline from the highs of the first week of August 2021 (Rs 776.50) to the first week of January 2023 (Rs 783.50) reveals a breakout trendline known as a bullish up flag pattern, signifying a continuation pattern. 

Remarkably, this consolidation is supported by the 100-week moving average (100WMA), indicating a healthy consolidation phase. The stock has experienced strong buying interest this week, resulting in a remarkable surge of over 5% and substantial trading volumes, surpassing the volume of the previous week and the 20-week average volume within the first half of this week.

Currently, the stock is trading around Rs 784, if it manages to close above the breakout trendline level (Rs 787), it will confirm the breakout of this long-term technical price pattern. The minimum target for this pattern is approximately Rs 1070, representing a potential increase of nearly 35% from the breakout level.

Additionally, JSW Steel recently witnessed a bullish crossover of the 5-13-26-weekly moving averages (WMA), and the 14-week period relative strength index (RSI) is comfortably positioned in the bullish zone (at a 61.90 RSI level), indicating strong momentum. 

Hence, both momentum traders and long-term investors should consider keeping JSW Steel on their radar for the upcoming sessions.