NEW DELHI: Metal stocks made a stellar comeback in Friday’s trading session after falling sharply since the start of April.
Among sectoral indices, NIFTY Metal index was the top performer on Friday as it rose 4.09% or 321 points with all its 15 components settling in the Green. Index heavyweights Hindalco, Tata Steel, JSW Steel and Jindal Stainless gained between 5 and 6%.
This rally was primarily triggered by the US government's decision to temporarily suspend the 26% reciprocal tariffs on Indian goods until July 9, 2025. Analysts believe that Indian metal companies are likely to benefit from relatively lower tariffs on India compared to the up to 145% tax levied on Chinese products.
The metal pack also rallied on expectation that China may soon roll out an economic stimulus to support its slowing economy amid the growing trade war with the US. For metal companies in India, this is a big positive given a growth in the Chinese economy pushes up demand for metals and their higher.
Ajit Mishra, Senior Vice President at Religare Broking, stated, "A relief recovery in metals alongside with other key sectors was witnessed, in response to the deferred tariff news. Besides, Tata Steel's news to transform its Netherlands operations is also adding to the positivity."
Local steel mills have already increased prices of hot rolled coil (HRC) by Rs 1,500 to Rs 2,000 per tonne following a decline in steel imports into India. Following this, domestic steel prices have risen by nearly Rs 5,000 per tonne from a four-year low of Rs 47,000 per tonne.
Domestic brokerage ICICI Securities said that it anticipates a healthy margin recovery for domestic steel players from Q4FY25 onwards, driven by the gradual recovery in steel prices and lower raw material costs.
Despite Friday’s rally, shares of most steel companies are trading well below their 52-week highs.
