Nornickel shares hit an all-time high: what's next?


Bidding results

At the previous trading session MMC Norilsk Nickel shares grew by 3.79%, closing at 24,050 rubles. The paper looked better than the market, which added 1.45%.

Short-term picture

Shares of GMK Norilsk Nickel on Thursday trading session, supported by the favorable sentiment on the Russian market, managed to break through the important resistance zone of 23,200-23,400 rubles and renewed the historical maximums, which are now at 24,050 rubles.

The growth of quotations brought the oscillators back to the overbought zone, and on the daily timeframe RSI is at the highest levels since the maximums of December 2019. This means that locally the paper is strongly overheated and a rapid correction may start if there is the slightest reason to decrease. At the same time, taking into account the fundamentally strong case of the company, we are not talking about a break of the uptrend - rather, we can expect only a technical movement on overbought. At the same time, while there is no info-target appeared and the general mood of the Russian market remains positive the growth of the paper may continue. It is difficult to designate specific growth targets, it may be near the current values or near 25 000 rubles.

Despite heightened risks of a corrective pullback in the short- to medium-term, the long-term outlook remains moderately positive. Nornickel's product basket prices remain high and dividend yields may be near the Russian market's highs over the next year.

  • Resistances: 24050 / 25000 / 26000
  • Supports: 23400 / 23200 / 22600

External Background

The external background is neutral this morning. The US indices after the close of our Thursday afternoon session remained at approximately the same levels. Asian platforms today are trading in different directions and do not show unified dynamics. Futures on S&P 500 Index are down 0.1% as of this morning, contracts on Brent oil in plus by 0.2% and are near the level of $50.3. All it gives the grounds to assume, that at preservation of external background the opening will pass near the previous day's closing.

Long term picture

Since 2009, Nornickel shares have been in a big up-trend. Growth impulses alternate with periods of sideways consolidation, and drawdowns are quickly redeemed, indicating the strength of the trend. The last period of prolonged sideways consolidation was observed from early 2015 to November 2018. Quotes came out of another sideways upward sidewall, and since then the stock has grown about 1.5 times, supported by the growth of prices for Nornickel's key products.

The threat of the coronavirus spread led to a large-scale decrease in quotations in March 2020. In late May, an accident occurred at CHPP-3, owned by Nornickel. The accident caused the stock to pull back again, laying the risks of significant financial consequences for the company. As a result, the securities were once again in a broad saw.

Nevertheless, trend indicators on the weekly timeframe now look up. There were no clear signals about the change of the global growing trend, although the general picture gradually moved to the format of a wide sidewall.

In November 2020, a new wave of growth began, in which historical highs were updated. Despite the local overbought situation, the long-term view on the securities is generally positive.

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