Jindal Stainless Ltd: Will Stainless Steel show its Shine ?

 Hello All, 

herein I share my view on Jindal Stainless, Jindal group company. Different timeframes are analyzed with different indicators.

Price action:

Stock made a high of 130 zone during January 2018 and saw a steep decline till 22. If we see the last consolidation zone, which started somewhere from November 2018 till now, the stock is within the consolidation zone of 25 to 45. Not tagging the price action with any pattern name (can be labeled as double bottom though, with ifs and buts), but this consolidation, right at the bottom of the rally, seems very encouraging. Within this consolidation, the price tried attempting to surpass 45 zone several times. But it has failed. The neckline of this consolidation is placed near 46 zone. 

Here on the weekly chart, multiple things are highlighted. 

200 EMA:

Since 2018, 200 EMA on a weekly timeframe acted as a decent resistance for the counter several times. The best part to notice is that due to consolidation, the difference between the price and the moving average is narrowing down. The stock has not given up the attempt to surpass the same. WEMA is placed at 47. 

RSI:

Strength is gathered decently in the consolidation of the last 2 years and RSI is forming a bullish divergence. Price breakout with divergence can add fuel to emerging rally. 

Direction Index:

Since the beginning of 2018, when the stock entered down-trend, negative DMI was dominating. But since June 2020, positive DMI has taken over the battlefield. With better higher top and supportive ADX line, it's inching up steadily, which is confirming the strength of emerging uptrend. 

Volumes:

If we notice the volume activities, within the consolidation of the last 2 years, almost every up-swing had a higher volume than the low swing. This behavior is confirming the phase to be the accumulation phase of the counter. 

Bollinger Bands:

Due to the narrow consolidation of the price, Bollinger bands are squeezed. This highlights the likely emergence of a trend. (That can be an up or down-trend). The present week is the first week where prices are getting plotted outside the upper band, which highlights the emergence of up-directional rally. 

Ichimoku:

Since June 2018, the stock was well below Ichimoku Cloud. It made an attempt to surpass the cloud area (resistance zone) during January 2020, but that turned out to be a failed attempt. The successful attempt was during June 2020. The stock penetrated well above the cloud, took the support of the same and continued uptick. The lagging span is about to surpass cloud and leading spans are showing bullish crossover. This highlights a bright possibility of trend change. 

Fibonacci Levels:

Reverse retracement is taken on the price action, right from the top to the bottom. It is clearly seen that the present level is right at the 23.6%, which is placed well on the neckline breakout zone. Above this zone, likely price targets can be 38.2% and 61.8%. 

Putting it all together:

Stronger price consolidation with sizable volumes, upward sloping RSI with positive divergence, strong DMI & ADX, squeezing Bollinger bands, and clearance of resistance zone of Ichimoku, all supporting likely emergence of new bullish trend. 

Buying can be initiated above the consolidation zone neckline, which is coinciding with 200 WEMA & 23.6% Fibonacci retracement level. 

Levels to watch out for:

Resistance / breakout zone: 46

Support zone: 39 

Cheers,
Kunal 

Statutory Disclosure:

Kindly note that this sharing is only for educational purpose. It is safe to assume that my personal position, my fund's position, and my client's, as well as relative's position, maybe open in the counter. Kindly prefer to take the advice of your financial advisor before initiating any position. Prefer to keep the risk-reward ratio in mind based on personal temperament, risk appetite, and financial background.