Metal Stocks Outlook
Seen consolidating next wk amid margin pressure
This story was originally published at 19:54 IST on 30 August 2024
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MUMBAI - Margins of steel companies are seen under pressure from cheap imports from China. However, the recent fall in coking coal prices, a major input cost for the industry, is expected to provide some support to margins. These mixed expectations will likely keep shares of steel companies in a range next week.
"We are facing an influx of Chinese products, putting pressure on steel prices," a research analyst with a Mumbai-based brokerage said. The revenue growth of steel companies may be muted going forward due to weak prices, even if domestic demand improves in the second half of this financial year, the analyst said.
Steel companies are also seen at risk from the economic slowdown in China, the world's largest consumer of metals. There are expectations that China may cut production soon as selling metal products at current prices may not be feasible.
A Mumbai-based analyst said there are expectations that the government may introduce anti-dumping duty to safeguard Indian companies from cheap imports.
The domestic demand for metals is widely expected to improve as construction activity improves once the monsoon season ends. However, weak prices are likely to be a major pain point for metal companies, analysts said.
The valuations of metal companies have largely factored in better performance in the second half of this financial year, keeping upside limited from here, analysts said. The performance of the Nifty Metal index has been muted in the past three months, declining over 3% during this period. However, it is still up nearly 18% so far in the current financial year.
TOP HEADLINES
* Tata Steel acquires 26% stake in Tata Power's arm TP Parivart
* India Ratings upgrades rating on Vedanta's CPs to A1+ from A1
* Moody's reaffirms Tata Steel's long-term issuer rating of 'Baa3'
* NALCO JV signs MoU with Oil India for critical mineral exploration
* Tata Steel buys arm T Steel Holdings' shares worth 23.48 bln rupees
* Moody's says infra growth will continue to boost India's economy
* Promoter group sells 4.4% stake in Vedanta, stake now at 59.32%
Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Hindalco Industries | 701.35 | 2.40 | 715.10 | 688.30 |
| Hindustan Copper | 332.55 | 5.10 | 341.90 | 320.50 |
| Hindustan Zinc | 500.75 | (-)2.50 | 506.30 | 492.30 |
| Jindal Steel & Power | 970.40 | 1.10 | 984.20 | 954.00 |
| JSW Steel | 941.10 | 0.00 | 960.90 | 928.70 |
| NMDC | 222.66 | 0.40 | 227.70 | 219.50 |
| Steel Authority of India | 133.69 | 1.40 | 137.10 | 131.70 |
| Tata Steel | 152.76 | (-)0.90 | 156.30 | 150.70 |
| Vedanta | 468.45 | 4.30 | 477.40 | 460.00 |
| Nifty Metal | 9405.25 | 1.20 | 9498.10 | 9323.50 |
| Nifty 50 | 25235.90 | 1.70 | 25303.50 | 25165.60 |
| S&P BSE Sensex | 82365.77 | 1.60 | 82800.60 | 82038.60 |
End
Reported by Anshul Choudhary
Edited by Saji George Titus
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