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BQEdge | Will Tata Steel Lose More Ground?

BQEdge is specially curated for BQBlue subscribers. Every day this note will offer special equity market and stock-specific insights and flag select emerging trends in the tricky-to-trade derivatives market.

On Today’s Edition:

  • Tata Steel hit a 18-month low on Wednesday. Technical indicators suggest more downside.
  • Why some of its peers may also share the pain.

Will Tata Steel Lose More Ground?

It’s Not Just Tata Steel...

Steel stocks will see lower realisations in the December quarter. Indian steel makers have been facing a double whammy of falling steel prices and higher input costs.

Global steel prices have corrected 24 percent from the multi-year high of $942 per tonne to currently $726. Iron ore, which is a key raw material, has risen 15 percent from its November low and now trades at close to 508 yuan a tonne on account of restocking. Another key raw material coking coal is trading at a fresh 52-week high.

BQEdge | Will Tata Steel Lose More Ground?

Moreover, production numbers were muted for Tata Steel, JSW Steel and most of their peers in the third quarter.

The Nifty Metal Index has lost 5.7 percent so far this year. The sell-off in the 15-member index comes on the back a 23 percent relief rally that started from July 2018.