The entire steel sector has taken it on the chin lately and JSW Steel [stockquote]JSWSTEEL[/stockquote] is no exception. After making a 52 week high close to Rs. 900 levels, the stock has seen a one-way hammering all the way down to Rs. 600 with its all time low of Rs. 566 in sight.
The question on everyone’s mind is when is the slide going to end? It is trading at a PE of ~6.8 while its most recent quarter EPS was 5.76. Also, JSW paid a dividend of Rs. 7.50/share last year and Rs. 12.25 before that. JSW was never a profit engine – historically, net profit and margins have not been that great.
As you can see from the chart below, RSI at 20 is showing extremely oversold conditions. However MACD is not confirming RSI.
Should you catch this falling knife? The answer is wait a while before you take the plunge. With a beta of 1.71, it is pretty volatile and given a choice between JSWSTEEL and TATASTEEL [stockquote]TATASTEEL[/stockquote], I will take Tata Steel for its global footprint and profitability any day. However, keep a close eye on JSW, a good bargain might just be around the corner as the stock races towards its 52 week lows.
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