Shares of metal companies were trading higher for the second straight day in otherwise range bound market.
On Tuesday, November 22, LMEX, a gauge of six metals traded on the London Metal Exchange (LME), closed 1% higher at 2,738, its highest level since June 2015. It gained 2.3% on Monday.
Vedanta (Rs 217) and Hindalco Industries (Rs 174) were up more than 4% each on the BSE in intra-day trade, after surging 5% each on Tuesday.
Tata Steel, Hindustan Zinc, NMDC, Steel Authority of India (SAIL) and JSW Steel were up between 1% and 2% as compared to 0.25% rise in the S&P BSE Sensex at 11:43 am.
The S&P BSE Metal index, the largest gainer among sectoral indices was up 2.2% at 10,229 points, extending its previous day's 2.7% surge on BSE.
JP Morgan is ‘overweight’ on Vedanta and Hindalco Industries as broadly both the companies have benefited from improved regulatory environment, allowing higher utilizations and improved balance sheets.
“Vedanta, with its diversified resource base, exposure to Zinc, volume growth across segments and attractive valuations with a more simplified corporate structure, is well placed in the current environment. Hindalco has a clear free cash flow trajectory driven by Novelis (US downstream subsidiary), and improving India upstream operations,” the foreign brokerage said in recent report.