The document discusses a technical analysis of Tata Steel stock. It notes that Tata Steel has relatively low volatility, and that a key support level is Rs. 550 based on a prior price swing. It also mentions that Tata Steel has recently purchased iron ore from NMDC to address issues with its captive mine, but that costs may increase without the mine. The analyst scaled into a position in Tata Steel around Rs. 544.95 and scaled out around Rs. 550, achieving their target price based on technical analysis. They reflect that overriding the system based on news was a mistake, and they should have followed their rules more closely.

1. 20th August 2014
LONG TATA STEEL EQ – System 2

2. Big Picture

4. • Tata Steel has below average volatility thereby
making the market condition as “quiet
sideways”.
• Based on Prior Swing (574-525) the 50%
retracement is 550.
• Relative strength analysis hints at
underperformance of Nifty vs Tata SteelEQ

5. Intraday Fundamentals
• Tata Steel Ltd has bought 100,000 tonnes of iron ore from NMDC Ltd in the last
two months and also sought a long-term supply tie-up with the state-run miner in
the backdrop of its captive mine in Odisha remaining shut owing to regulatory and
legal action and the commissioning deadline of end-fiscal year 2015 (FY15) for its
new plant drawing near.
• “The cost at which the non-captive ore is coming will be unbearable for Tata Steel,”
said Prakash Duvvuri, head of research at metal and mining information and data
website OreTeam. “On per tonne basis, the profit margin could get squeezed by
25-30% easily.” “Delay in commissioning Odisha project would be a risk to
earnings,” said the report.
• Hold Tata Steel; target of Rs 561: Arihant capital markets

6. Trade Management

7. • I scaled in via multiple bids giving me an
average price of 544.95 with a initial stop of
541.
• I scaled out of my positions between 548.2 till
551.4 giving me an average of 550.2 , the 50%
of the retracement of previous swing co-
incided with my average sell price.

8. Intuition
• Maybe – Not sure.

9. Review
• I did a great job in identifying the opportunity.
• I did a great job by putting in my SL orders in the system to manage
initial and trailing risk.
• I moved my stop beyond break-even to enter into a “riskless”
situation.
• I could have made my position bigger in the consolidation between
549-546 with a closer stop.
• Sub consciously my mind drifted to the news flow I had read during
the day and I decided to over-ride “System 2” by reducing my
exposure.
• It was a bad decision to take off the full position as it involved
breaking my rules. I should rather reduce exposure by only 50% and
follow the system. My intuition has mostly been wrong in the past
and this time although it was lucky.