Nifty Metal index rises 1.5%: SAIL, NALCO, Vedanta, NMDC, Tata Steel lead the gains

Stock Market Today: Nifty Metal index gained 1.5% in morning trades on Friday. Steel Authority of India Ltd ( SAIL), NALCO (National Aluminium Company Ltd), Vedanta Ltd, NMDC, and Tata Steel share prices were leading the gains. Jindal Steel and power , Hindustan Zinc share prices were other prominent gainers, all rising 2-3%.

Both ferrous and Non ferrous share prices as that of Steel Authority of India Ltd ( SAIL), NALCO (National Aluminium Company Ltd), Vedanta, Ltd, NMDC, Tata Steel, Jindal Steel and power , Hindustan Zinc and others have traded volatile during last one month.

However gains have been driven by news flow around China being poised to cut interest rates on more than $5 trillion of outstanding mortgages.

China demand has remained one of the key concerns for metal companies with China being the largest consumer of commodities the world.

Out of 4-5% gains seen by metal index in last one month more 3% have gains have taken place in last two trading sessions, driven by news flow around China

Steel manufacturers have seen more concerns as steel price saw higher pressure with weak China domestic demand and rising China exports putting pressure on global steel prices. Steel Authority of India Ltd (SAIL), Tata Steel, Jindal Steel and power , JSW steel share prices thereby have seen more volatility compared to non ferrous peers.

Spot Chinese export HRC (Hot Rolled Coil) prices declined 8.9% month-on-month and 15.6% YoY to $460 per ton while Chinese domestic steel price softened 8.9% MoM and 19.7% YoY to $432 per ton as per Antique Stock Broking report dated 13 September. International iron ore prices have declined 7.5% month on month to $92 per ton.

On the positive side steel demand remains strong in India driven by government led infrastructure spending. The July to September quarter though may see some softness as construction activities take a back seat due to monsoon, nevertheless volume growth may remain strong during second half of FY25 and financial year as a whole.

The positive may accrue from declining coal prices and steel markers thereby see some respite on margins despite steel prices not seeing much improvement.

Antique Stock Broking says that lower coking coal prices would partly mitigate the negative impact of weaker steel prices and strong domestic volumes stand to support profitability of Indian steelmakers. They prefer steel companies with strong market presence, greater raw material integration, low leverage, and higher exposure to the domestic market.

Their preferred picks are Jindal Steel and Power Ltd and Tata Steel.

Tata Steel's Port Talbot (UK) transition from blast furnace to electric arc furnace is underway with the 500 million pound grant funding agreement (from the UK govt.) having been signed.

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