More Stories

Informist, Saturday, Nov. 28, 2024

MUMBAI – Base metal companies are likely to fall next week as product prices are unlikely to improve anytime soon due to weakness in China's property sector, which forms a large part of global demand for metals. Further, high valuations of stocks in the sector at a time when recovery in China is doubtful, may push investors to sell these companies.

"Markets don't seem to think stimulus by China is enough to lift the property sector," said Sriram Iyer, senior analyst at Reliance Securities. He said demand from other industries such as electric vehicles is strong but that is unlikely to offset the weak demand in China. While demand in India is strong, the industry needs better demand from China for product prices to improve, he said, adding that these headwinds for Indian metal companies may remain for 1-2 years.

Demand from China has been a concern for some time now, with the overall correction in the market in the past two months leading to a decline in shares of metal companies as well. Nifty Metal has declined for the second straight month, declining over 11% during this period. This week, the sectoral index rose over 2% to close at 9034 points.

The ratings' agency CRISIL also raised concern over cheap imports from China. Demand for steel globally is likely to contract for the third consecutive year, which will result in an increase in imports, especially from China, CRISIL said Thursday in a report.

The net leverage of domestic primary steel-makers will hit a five-year high of more than three times in the current financial year as their debt is expected to rise over 25% on continued capital expenditure even as profitability is hurt by cheaper imports, CRISIL said. However, the moderation in credit metrics will be manageable as the net debt per tonne is below the pre-pandemic level and there is lower risk in the implementation of capital expenditure.

There is another level of uncertainty due to looming concern that the newly elected US President Donald Trump may levy tariffs against China, which may further affect growth in China. In a social media post earlier this week, Trump said immediately after taking office, he would impose an additional 10% tariff on Chinese imports until the Chinese government curbs the smuggling of synthetic opioid fentanyl.

TOP HEADLINES

* SC asks Odisha to state amount of penalty pending for illegal mining
* SPOTLIGHT: Aluminium seen rising further as China drops export incentive
* Vedanta Resources Finance raises $800 mln via 2 bond issuances
* Vedanta arm to invest $2 bln in copper projects in Saudi Arabia
* NCLT asks Vedanta to hold shareholders, creditors meet on proposed demerger
* Godawari Power acquires 21.5% stake in Jammu Pigments for INR 695.40 mln

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 Anshul Choudhary

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.