Derivatives outlook | What should be the options strategy for JSW Steel ahead of the Q1 results?

JSW Steel, India’s largest steel producer by domestic capacity, is set to announce their first quarterly financial results on July 21. Despite the expectation of weaker earnings in the metal sector, analysts believe that JSW Steel Ltd may stand out and report improved earnings.

Analysts said that JSW Steel‘s turnaround in the situation is due to falling coking coal and iron ore prices in the metal sector, which could potentially alleviate the pressure on JSW’s margins and improve its overall performance in the future. They predict that the company’s sales for the June quarter may jump 25 percent year on year, primarily driven by higher volume growth. Furthermore, the EBITDA is expected to double during the quarter, primarily due to the boost in sales.

Let’s take a look at the outlook for JSW Steel stocks from a derivatives perspective ahead of the earnings results on July 21.

JSW Steel has surged fresh all-time highs of 815 in the July series and thereafter consolidated in a narrow range. The sentiments remained positive in the counter amid news of counter to replace HDFC in the Benchmark Index Sensex. The stock is trading in an upward trending channel on the weekly chart.

“Until the 765 level is taken out, the trajectory of the stock looks bullish in nature. The stock even though it broke its all-time high a few days back, has consolidated well, which is a healthy sign, and we can expect an up-move in the month to come,” stated Rahul K Ghose, Founder & CEO – Hedged, an algorithm-powered advisory platform.

The stock price is trading above the major moving averages with Bollinger bands expanding in the northward direction. Arun Mantri, founder of Mantri FinMart, stated that the overall trend of the stock is strong and is expected to test higher levels in the near term. The support for the stock is placed at 780, while any close above 800 levels may trigger a short-term rally in the counter, he said.

Furthermore, Jay Thakkar, Head – Alternate Research, Capital Market Strategy, Sharekhan by BNP Paribas, said that JSW STEEL is trading well in the range of 780-810, which is a range of 30 points, and a move till 840 is expected.

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