Nifty Metal index hits 52-wk high; SAIL, Nalco, Hindustan Copper up over 5%

The metal sector reported a positive July-September quarter (Q2FY21) performance primarily on account of higher capacity utilisation and healthy realizations sequentially
Shares of metal companies continued their northward movement with Nifty Metal index gaining nearly 2 per cent in the intra-day trade oin Wednesday, hitting a 52-week high on the National Stock Exchange (NSE) on improved demand outlook.

National Aluminium Company (Nalco), Steel Authority of India (SAIL) and Hindustan Copper from the index were up between 5 per cent and 7 per cent on the NSE. Jindal Steel and Power (JSPL), NMDC, JSW Steel, Tata Steel and Moil, on the other hand, were up in the range of 2 per cent to 3 per cent.

At 10:56 am, Nifty Metal index, the second largest sectoral gainer after Nifty Realty index, was up 1.9 per cent as compared to a 0.14-per cent decline in the Nifty50 index. The metal index hit a 52-week high of 3,044, its highest level since June 2019 on the NSE.

Sunflag Iron & Steel Company, Tata Steel Long Products, Jindal Stainless (Hisar) and Jindal Stainless were among non-index stocks that surged more than 5 per cent on the BSE.

On account of improvement in demand coupled with a rise in prices of iron ore, Indian steel mills have hiked prices (with effect from December 1) by Rs 2000-2500 per tonne, media reports suggested. Post the hike, the prices of hot rolled coil (HRC) is at Rs 47,000 per tonne.

Meanwhile, the metal sector reported a positive July-September quarter (Q2FY21) performance primarily on account of higher capacity utilisation and healthy realizations sequentially. During Q2FY21, there was a sequential improvement in base metal prices. The boosted investment sentiments along with demand recovery from China will support base metals to trade up.

"The recovery in global economic activity and China's infrastructure spend will keep demand for industrial metals strong. Over the next 6 months prices may remain firm at the current levels as demand recovery in China and the rest of the world continues to gather pace. Increase in raw materials prices may push prices upwards," CARE Ratings said in October metal sector report.

An anticipated infrastructure development-led stimulus package by some of the other large economies like US, UK and India may spur demand for industrial metals and rally in metal prices, it said.

However, slower than expected recovery in the rest of world, delay in vaccine for Covid-19, health and economic concern, escalation of US-China trade tensions are considerable headwinds for base metals. The resurgence or a second wave of Coronavirus in China could lead to fall in all base metal prices, the rating agency said.

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