Markets have seen a very strong up move contributed by pocket buying in some of the sectors and heavy lifters . But the economy needs more time to stabilize and reach at pre covid levels.
However the stocks are defying this logic and have recovered from their lows , one such stock is Hindalco . While most analysts are upbeat on this stock , i have a slightly different view.
3 main sectors for Aluminium demand are Auto , building , road constructions. These sectors are still lagging behind so obviously growth will take time to reflect in earnings. Hence i feel , at this level of 146 stock is over priced . Before march quarter the stock had a ROE of 9x which is low considering its operational size and demand story of India. In long term the stock is good to keep in your portfolio , but in times of crisis this will show a sharp down fall as its a real economy stock!
If you look at the commentary made by NALCO , the production itself has gone down given that summer period was locked down and in monsoon period excavation / mining is minimum .
Now coming to technicals , the stock is looking exhausted and can see a vertical fall from here . We are estimating a target of 120 in July series.