Profit

Metal Stocks Extend Gains to Fifth Day

 Share
EMAIL
PRINT
COMMENTS
Metal Stocks Extend Gains to Fifth Day

Metals stocks rose sharply over the past week with Tata Steel jumping over 15 per cent. JSPL and state-run miner NMDC clocked over 10 per cent gains while Hindalco and Sesa Sterlite jumped over 7 per cent each. (Track Metal Stocks)

In comparison, the Nifty gained nearly 2 per cent over this period.

Positive outlook on Indian economy, dip in raw material prices and good China factory data helped the metal stocks to sharply outperform the broader markets, say analysts.

The strong mandate for the Narendra Modi government has spurred hopes that the Indian economy has bottomed out and it could successfully restart the investment cycle. Sentiment was also supported after the Reserve Bank of India on Tuesday eased rules to spur bank lending and toned down its inflation rhetoric in moves set to be welcomed by a new pro-business government determined to revive economic growth.

Analysts say that the steel sector is also poised to turn the corner. Brokerage firm Nirmal Bang had been negative on the ferrous sector for three years on factors like "subdued steel demand globally and slowdown in local demand". Currently, according to Nirmal Bang, international steel prices and raw material prices like iron ore are hovering around four-year low.

But now Nirmal Bang expects international steel prices to stabilize as "we don't expect a sustained fall in raw material prices as they have declined to a level where a large portion of Chinese supply is likely to remain unviable portion of Chinese supply is likely to remain unviable."

Also, contributing to the positive outlook for steel sector, China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted, a private survey showed, adding to signs the economy may be stabilising.

In today's trade, the BSE metal index rose nearly 2.5 per cent to outperform a flat Mumbai market, extending gains to the fifth day. Sesa Sterlite was up over 6 per cent to be the biggest gainer among Nifty stocks. JSPL and Tata Steel were up over 2 per cent each.

NDTV Beeps - your daily newsletter

................................ Advertisement ................................

................................ Advertisement ................................

................................ Advertisement ................................

Top