Headline – Steel Authority of India: Breaking free from a decade-long consolidation

Steel Authority of India Ltd (SAIL), a major player in the steel industry, is poised for a significant breakthrough as it charts a new course after a decade-long consolidation. Established on January 19, 1954, SAIL is engaged in the manufacturing and sale of steel and steel products, offering a range of flat and long products.

Researching the past

In early December 2007, SAIL initiated a retracement phase after reaching a high of Rs 293, marking the beginning of a massive 16-year consolidation period characterised by lower highs and lower lows. Amid the challenges posed by the pandemic, the stock touched lows of Rs 20.15 but subsequently rallied to form another lower high within the consolidation zone.

The pivotal point in SAIL’s recent journey is the emergence of a significant breakout trendline, connecting the high point of December 2007 (Rs 293) with the peak of May 2021 (Rs 151.30). This technical continuation pattern unfolded over a decade, and recent trading sessions suggest a potential shift in the narrative.

Current stock performance

In the last two weekly trading sessions, SAIL experienced a surge of more than 11%, accompanied by robust volumes. In today’s trading session, the stock witnessed a 5% surge, reaching a day high of Rs 138.40, surpassing the breakout trendline at Rs 134 with substantial volumes exceeding 120 million shares.

This trading action indicates a potential reversal of the trend that persisted for the last 16 years. A monthly closing above the breakout trendline at Rs 134, supported by above-average volumes, would provide the final confirmation.

Future outlook

With a potential target set at Rs 201, representing a gain of more than 50% from the breakout threshold at Rs 134, this scenario presents an enticing opportunity for long-term investors seeking a multibagger opportunity. The company’s trajectory offers a promising outlook, brimming with potential for further upward gains.

As SAIL breaks free from its decade-long consolidation and begins a new chapter in the metal sector, investors are advised to closely monitor its performance. The exciting prospects it presents in the evolving landscape make SAIL a stock to watch for those recognising the potential for significant growth in the steel industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.