Why did the metal index rally 5%

metal index rally

by 5paisa Research Team Last Updated: Jul 01, 2022 - 07:20 pm 56.9k Views

Metals have been in the limelight for some time now. Most of the metal stocks have either doubled or tripled since January 2021 and that has been triggered by strong demand and pricing power for steel companies and aluminium. This offset the spike in input costs that most metal companies faced. On 29 July, there was a sharp rally in metal stocks with the overall NSE metals index rallying 5%.

 

Stock Name

Closing Price (28-Jul)

Closing Price (29-Jul)

Gains (%)

Tata Steel

Rs.1,365

Rs.1,459

6.89%

JSW Steel

Rs.721.70

Rs.748.40

3.70%

SAIL Ltd

Rs.133.85

Rs.141.95

6.05%

Hindalco Ltd

Rs.416.30

Rs.458.10

10.04%

NALCO Ltd

Rs.85.50

Rs.92.95

8.71%

Vedanta Ltd

Rs.270.10

Rs.288.60

6.85%

NSE Metals Index

5,532.80

5,810.75

5.02%

Data Source: NSE


The table above captures the rally uniformly across metal stocks on 29 July. Clearly, the rally was driven by the Bloomberg news item about China planning export curbs on Steel. 

This means two things. Firstly, China itself would rely more on imports of metals to meet its insatiable appetite for metals. Secondly, less of Chinese steel will be available for exports, so the global steel market opens up for India.

Effective 01 August, China is imposing 10-25% export duties on hot-rolled coils. It wants to reduce carbon emissions from manufacture of steel and that will reduce China’s supply in the world metals market; keeping prices buoyant. 

Domestic tailwinds are also positive. Brokerages are expecting steel companies to report higher EBITDA/tonne in Q1. Tata Steel is expected to post record EBITDA/tonne of Rs.33,000 against Rs.27,775 in Q4. Demand for aluminium, lead and nickel is already robust on EV demand. Hindalco is also expected to post 71% growth in EBITDA/tonne. Overall, it looks like Q1 could be a record-breaking quarter for metals.

How do you rate this blog?

or

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Open Free Demat Account
Resend OTP
Please Enter OTP
Account belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Swing Trading Stocks: Week of 3 October 2023

Swing Trading Stocks for the Week

  • Sep 29, 2023
Weekly Outlook on Gold - 29 September 2023

Gold prices are facing sustained pressure despite a backdrop of dollar weakness, a rare occurrence that coincides with a decline in yields on US Treasuries. Typically, the strength of the dollar and higher yields have been key components of the Federal Reserve's hawkish monetary policy.

  • Sep 29, 2023
Weekly Market Outlook for 3 October to 6 October

The last week of September turned out to be volatile as the markets corrected during the monthly expiry to test the 19500 mark. We witnessed a strong recovery in Friday’s session, and the index finally ended the week above 19600, with marginally weekly loss.

  • Sep 29, 2023