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Informist, Friday, Aug 2, 2024

MUMBAI – Shares of metal companies are expected to consolidate next week and track the global markets, analysts said. Some analysts refrained from taking any fresh calls on metal stocks as mixed cues are seen impacting the sector. Weakness in global equity markets and recent data indicating a decline in manufacturing activity in China are likely to weigh on investor sentiment, while indications of interest rate cuts by the US Federal Reserve and any further comments from the central bank cementing these hopes may lead to a recovery in buying momentum.

The movement of metal stocks largely depends on global aspects, Arpan Shah, a senior research analyst at Monarch Networth Capital, said. This was evident with the manner that these stocks became major beneficiaries and surged after dovish commentary by the US Federal Reserve indicated potential rate cuts, the analyst said. Rate cuts at the September policy meeting will be a "big boost" for the commodity sector and will aid related stocks.

Earlier this week, metal stocks saw strong buying interest after the US central bank hinted at rate cuts at its next policy meeting in September. However, the sector took a deep dive today after weak economic data from the US raised concerns that the country was heading towards a recession.  

Global markets are weak right now, with a sharp sell-off in Asian markets where commodity-related stocks fell the most, Shah said. The sector needs to settle before we can have a fresh look at it to decide what direction the sector will take next, he added.

China's manufacturing sector, which is a major contributor to metal demand, has also been declining. Manufacturing activity in the country shrank to 49.4 in July from 49.5 in the previous month, as per official data released Wednesday. This was the third month of decline in manufacturing activities in the country. 

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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Alina Geogy

Edited by Tanima Banerjee

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