Thursday, 3 September 2015

Ask Pathiyil! My views on Tata Steel


Good Evening!

We have received a stock query from Mr. Hukumat Nathwani. He wants to know what are the prospects of Tata Steel?


Here is my view on Tata Steel.

Fundamentally and technically Tata Steel is looking weak. This is one of the stocks which I used to track very closely till a year back. I would like to highlight one important factor here, to my experience I have seen technical studies turn first followed by the fundamental factors; this is one of the reason why I focus more on technicals and not purely going by fundamentals. There is always a difference of opinion between technical analysts and fundamentalist on which one is supreme school of thought, however I believe to earn money from markets you should have through understanding of both the sciences.

Let’s get back to Tata Steel. During the month of May, 2014 when this stock broke out on the positive side, I considered it to be the best buy. However the beauty of technicals is this, it can only initiate a trend but if it has to be a good bet, it should be backed up by changes in fundamentals of the company. Tata Steel’s fundamentals failed to give a better picture and hence the stock turned bad during the month of December 2014. Now if you look at it, both fundamentals and technicals do not support to buy or hold on to this stock.



Technically, this stock might see a dead cat bounce towards 333, however if this happens this should be taken as an opportunity to exit. The reason is simple, if the technicals and fundamentals has to change for this company, it would take a minimum of 2 years and that is also not a definite thing to happen. Since we are in a multi month bull run, we have much better stocks to make money from the market.

On the pipeline for askpathiyil, we have a query on FT, IDFC and a list of portfolio. I will be answering by this weekend. If you have any stock query please write to me at askpathiyil@gmail.com


Thank you. Happy Learning!

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