Tata Steel surges despite bleak outlook

Stock has risen 13% this month

Even as the outlook on the metal sector continues to remain bleak, the share of Tata Steel has been on the rise in the last fortnight. Since the beginning of this month, the stock has risen by nearly 13%.

On Tuesday, the stock was trading up 0.5% at Rs 248.20.

Analysts continue to maintain a ‘sell’ mandate on the stock even though the company’s first quarter earning numbers were better than market expectations. “The overall sentiment around the sector has been negative. Fundamentals of the company are not good at the moment. This is just sentiment-based buying as valuations look attractive,” said a metal sector analyst with an Indian brokerage.

Analysts said that institutional interest in the stock had come down. However, retail and HNIs were seen buying into the stock to take advantage of the low valuations.

“Institutional investors would rather wait for things to improve and buy the stock. They wouldn’t even mind paying more than the current market price. However, retail and HNI clients are looking to make a quick buck at this juncture,” said another sector analyst.

In a recent note to its clients on Tata Steel, brokerage firm Motilal Oswal maintained its sell outlook for the stock stating high debt-levels and negative free cash flows as reasons.