Steel Stocks Outlook for the week (27-31.08.2012)
Stocks of major steel companies are seen down next week due to the dull demand scenario which has led to inventory build-up, in turn disturbing the domestic steel demand-supply equation. Worry over economic recovery in leading steel consumers such as China and Europe has dampened demand for the commodity in the global market, consecutively infusing a subdued trend in the local steel market. Due to mounting inventories, large domestic steel producers are offering products at discounted rates and some also offering cash-back offer in order to promote sales.This clearly shows there is no much demand for steel in the domestic market. Currently, Tata Steel is offering 2% cash back on every purchase of Tata Tiscon TMT bars, said media reports.
However, JSW Steel shares look positive next week. We recommend buy in JSW Steel above 759 rupees which is also a good resistance level. Support for the stock is seen at 706 rupees. In the current scenario, where local steel demand is dull and JSW Steel is facing shortage of good quality iron ore, the company has been performing well. On technical charts, Tata Steel and Steel Authority of India look weak in coming sessions. Tata Steel may find support at 382 rupees and face resistance at 415 rupees, while Steel Authority of India may trade in 81-89 rupees range.
