Technical Check: This multibagger from metal & mining sector is a good long-term buy - here’s why
National Aluminium Company Limited (NALCO), a Navratna CPSE under the Ministry of Mines, has already rallied more than 170 per cent so far in 2021.
National Aluminium Company Limited (NALCO), a Navratna CPSE under the Ministry of Mines, has already rallied more than 170 per cent so far in 2021, and over 270 per cent in the last one year compared to 32 per cent, and 56 per cent upside seen in the Nifty50 in the same period.
The stock has been on buyers’ radar amid rising aluminum prices as well as privatization buzz. Experts are of the view that it is a perfect buy on dips stocks and investors with a long-term outlook can keep them in their portfolio.
After a steep rise, some consolidation cannot be ruled out. A stop below Rs 104 can be kept for all the long positions, suggest experts.
NALCO is one of the largest integrated Bauxite-Alumina-Aluminium- Power Complex in the country. The company has a 68.25 lakh TPA Bauxite Mine and 21 lakh TPA (normative capacity) Alumina Refinery located at Damanjodi in Koraput district of Odisha, and 4.60 lakh TPA Aluminium Smelter and 1200MW Captive Power Plant located at Angul, Odisha.
Technically, the stock has been making higher high and higher low price formation from December 2020 and is currently sustaining above the highs of 2011.
What is fueling the rally?
The sharp recovery in the metal sector and PSU buying is also helping National Aluminium to build strength, suggest experts.
“The stock is a beneficiary of rising aluminum prices and has the potential to reach new highs in near future. On the front of the moving average, the stock hasn't breached its 20 Weekly EMA ever since the formation started, which means that the trend is very strong,” Vishal Wagh, Research head, Bonanza Portfolio, said.
“On the RSI front, the weekly RSI is at 72, which means that the stock is hovering near overbought levels, and ADX tells us the strength in the trend, has again started its uptick,” he said.
Historically, it is seen that the 45-48 levels of ADX is the highest for the stock and it tends to retrace back after reaching such high value.
Wagh is of the view that the overall structure looks bullish and has the potential to reach a new all-time high, and once the stock sustains above all-time high, the strength will get multiplied. Place a stop loss below Rs 104.
(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.)
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