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Business News/ Markets / Stock Markets/  Metals index on a rise: Which stocks to buy?
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Metals index on a rise: Which stocks to buy?

Stock Market Today: The S&P BSE metals Index that saw gains of almost 0.6% on Tuesday, has risen more than 12% since August lows. While some rebound in metal prices have lifted sentiments focus will now shift to Q2 performance. JSPL remains amongst top picks of analysts.

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The S&P BSE metals Index that saw gains of 0.6% on Tuesday, has risen more than 12% since August lows. The share prices of many metal companies in both ferrous and nonferrous space have continued to rise with some uptick seen in steel and base metal prices during the last few months.

As per Elara Securities India Pvt Ltd data, during September, prices of major non-ferrous metals excluding copper moved up month on month on the London metal Exchange (LME). The LME lead price increased 5% month on month, followed by 4% month on month rise in zinc and 2% MoM up move in aluminum.

Also domestic HRC (Hot Rolled Coil) prices were up 2 % month on month till 10 October while long product prices were up 1% month on month over September average. The strong domestic demand and rising raw material prices have been key reasons that have been supporting steel prices in the country.

Some caution, however, prevails now. Till international metal prices see significant uptick, domestic steel prices may also see limited upside say analysts. For base metal prices, supply demand scenerio remains unfavorable. also continues, 

Analysts at HSBC Global Research say that Outlook for metals demand remains clouded by China property concerns and macro uncertainty in the Rest of the world.

In the domestic arena too the onset of festive season may also mean that steel prices may remain rangebound. Analysts at Motilal Oswal Financial Services Ltd said that “Our channel checks confirm that vendor-level prices have remained slightly muted and are expected to remain range-bound in the near term".

The domestic prices are currently trading at a premium to international prices as per MOFSL. However higher demand from automobiles, infrastructure, construction, and consumer durables prior to multiple national holidays is expected to support the overall demand and price they said.

Meanwhile the street will be watchful of Q2 performances to be reported by metal companies soon.

Also Read- NALCO, NMDC share prices gain as nod for royalty rates for Lithium, REEs lift prospects

Going ahead, commentaries from the companies will be critical as the price-cost effect outlook (particularly for ferrous) is likely to take center stage, said analysts at ICICI Securities. Their top picks include Jindal Steel and Power Ltd (JSPL), Jindal Stainless, and Shyam Metalics.

Kotak Institutional Equities says that they find better risk reward in ferrous over non-ferrous producers and in their metals’ coverage. JSPL remains their top pick.

Also Read -Metals Sector Q2 Earnings Preview: Mixed bag performance likely, says Nuvama; prefers JSPL, Coal India

JSPL, Hindalco Coal India and NMDC remain amongst top picks of Motilal Oswal financial Services.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

 

 

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ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 17 Oct 2023, 05:59 PM IST
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