Most of the metal stocks are under pressure these days, after a strong cycle following the Covid outbreak. In the past one month, the share price of Steel Authority of India Ltd or SAIL has fallen over 22 per cent, while the share price of PSU metal major National Aluminum Company or NALCO has fallen by 25 per cent in the same period. The share price of Tata Steel has gone down from around from 1320 1140 level, a decline of about 14 percent in the last one month.
according to this Share Market Experts, economic slowdown in China, dollar index reaching 34-year high and supply exceeding demand are the main reasons for the fall in metal stocks. He also said that the Nifty Metal Index has declined from the 22,000 level to the 18,800 level and is expected to slide further down after a few rebounds. He further added that perhaps the 3-year strong cycle of metal stock rally is over now and it may remain in the heat of selling in the next few quarters.
Avinash Gorakshakar, Head of Research, Profitmart Securities, while speaking on the reasons for continued selling in metal stocks said, “Despite reports of reduction in debt of metal companies, there is a sell-off in metal stocks. Reports of slowdown in China, dollar index rises.” To record 20-year high and demand exceeding supply should be attributed as the key reasons for the recovery in metal stocks.China is a major consumer of metals and slowdown in China led to a slump in demand for metals. In addition, the US dollar has been consistent with the dollar index reaching its 20-year high, making imports of metals more expensive for metal companies.”
Sumeet Bagadiya, Executive Director, Choice Broking said, “The BSE Metal Index had slipped from the 22,000 level to around 18,100 level yesterday. However, the index has seen some bounce in this morning’s deals. Strong support to BSE Metal Index. Metal stocks may decline further if the index breaks this support at 18,000 level.
Echoing the views of Sumeet Bagdia, Manoj Dalmia, Founder & Head of Research, Praveen Equities said, “On breaches 18,000 support, BSE Metal Index will target near term at 17,500 levels and if further sell-off, it will go up to 15,500 levels. level.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.