Nifty Metal index rises 2% in an upbeat market, led by Tata Steel, SAIL

Shares of metal companies were in focus as the Nifty Metal index was the top sectoral gainer, up over 2 per cent, after global brokerage firm Jefferies turned ‘positive’ on India metals. Since China started to ease Covid-19 policy, the support has started to ail their property sector, said analysts.

Among individual stocks, shares of Tata Steel, Steel Authority of India (SAIL) and Jindal Stainless rallied in the range of 5 per cent to 7 per cent, while, MOIL, National Aluminium Company, Hindustan Copper, Vedanta and Hindalco were up 3 per cent to 4 per cent.Shares of Jindal Steel and Power, on the other hand, rallied 4 per cent to hit a 52-week high of Rs 601.90 in Monday’s intra-day trade.

Besides, the Nifty Metal index was up 2.3 per cent, as against 0.36 per cent rise in the Nifty50 at 1:00 pm.

Moreover, shares of non-index stocks like Usha Martin, Prakash Industries, Rama Steel Tubes, Jai Balaji Industries, Sunflag Iron & Steel, Godavari Power & Ispat and Lloyds Metals and Energy, too, surged up to 15 per cent in Monday’s intra-day trade.

After a steep selloff from foreign portfolio investors (FPIs) in the second and third quarter of this fiscal year, the metals space is vibrant once again from the last couple of months.

Therefore, analysts believe that the worst-margin quarter for the Indian steel firms, and a big chunk of earning cuts for Tata Steel or Hindalco are behind.

“With China re-opening and rushing to finish real estate projects, we expect demand for iron ore to remain strong in the near term. In addition, with winter in China, the focus shall again be on importing more pellets from India which would drive demand for iron ore in India. That apart, the government waiving off pellet export duty is an added advantage,” said analysts at Motilal Oswal Financial Services.

Meanwhile, according to analysts at ICICI Securities, a recovery in world steel demand is likely to be moderate and volatile in nature, wherein India remains a bright spot globally.

Though the global steel demand is likely to contract by ~2.3 per cent to ~1,797 metric ton (MT) in CY22E, it would later witness a marginal recovery of ~1 per cent to ~1815 MT in CY23E. On the other hand, Indian steel demand is likely to increase by ~9 per cent to ~115 MT in FY23E and further increase by ~6 per cent in FY24E to ~122 MT.

As the global steel demand recovery is likely to be uneven, prices are likely to remain volatile. In such a scenario, healthy domestic demand growth augurs well for Indian steel players, said analysts.

“After a subdued GDP growth in CY22E, we expect a modest recovery in China’s economic growth in CY23E. The improved GDP growth coupled with recent steps taken by authorities to relax Covid-19 related restrictions is also likely to aid moderate recovery in Chinese steel demand in CY23E,” the brokerage firm added.