Metal Stocks Outlook
Seen down amid weak pdt prices, risk of higher cost
This story was originally published at 19:24 IST on 20 December 2024
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MUMBAI – Metal and mining companies are seen down next week amid major headwinds such as weak product prices and a risk of higher costs if states levy mineral bearing tax. Analysts don't expect any turnaround in the sector in the near term.
Stocks in the sector fell this week after the Karnataka government reportedly tabled a bill in the state assembly to levy taxes on minerals and mining activities. There is a worry that other states may also impose similar taxes, leading to a rise in costs for steel producers.
"In an industry where companies have no control over prices, if the cost also goes up, it would hurt the margins... there would be no room for margin expansion," a research analyst with a domestic brokerage said earlier this week. Nifty Metal fell 6.6% this week, with Jindal Steel & Power, NMDC, JSW Steel, and Vedanta declining by 8-9%.
Nuvama Institutional Equities on Wednesday said Vedanta's future volumes from Karnataka mines will be affected due to the proposed taxes since the company will have to pay three times the royalty rate, which is at 15%, along with INR 100 per tonne as tax on iron ore. NMDC will also have to pay 22.5% of the price set by the Indian Bureau of Mines, along with the tariff of INR 100 per tonne, as additional tax. Overall, such higher taxes may lead to higher iron ore prices in India and hurt volume growth, the brokerage said.
The development comes at a time when steel product prices are already weak owing to weak economic growth in China. Analysts expect prices to remain low unless the government imposes taxes on cheap imports from China.
TOP HEADLINES
* PRESS: Karnataka's new mineral levy to squeeze margins of steel companies
* India jewellery demand faces headwind, investment stays supportive, says WGC
* Lloyds Metals to buy 79.82% stake in Thriveni Earthmovers for INR 700 mln
* SC notice to Noble Chartering on SAIL's plea against arbitral award
* Tata Steel's UK arm to supply green steel to JCB from Port Talbot unit
* To convene shrholder, creditor meets soon for demerger nod: Vedanta official
* SC orders release of INR 40 bln of Bhushan Power assets to JSW Steel
* Govt is assessing steel sector's demand for safeguard duty, says trade secy
* Vedanta board OKs interim dividend of INR 8.5 per share for FY25
* India Ratings upgrades Vedanta's NCD rating to 'AA-' from 'A+'
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:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Hindalco Industries | 622.65 | (-)6.00 | 647.90 | 608.10 |
| Hindustan Copper | 271.50 | (-)7.00 | 294.70 | 249.40 |
| Hindustan Zinc | 468.80 | (-)6.30 | 490.60 | 455.40 |
| Jindal Steel & Power | 908.05 | (-)9.10 | 945.90 | 885.10 |
| JSW Steel | 917.35 | (-)8.30 | 953.40 | 894.10 |
| Jindal Stainless | 719.80 | (-)5.30 | 758.10 | 697.50 |
| National Aluminium Co | 215.36 | (-)4.90 | 227.00 | 208.30 |
| NMDC | 213.15 | (-)8.80 | 222.60 | 206.40 |
| Steel Authority of India | 116.10 | (-)6.90 | 123.00 | 111.70 |
| Tata Steel | 140.68 | (-)5.60 | 146.10 | 137.30 |
| Vedanta | 477.25 | (-)8.10 | 501.80 | 462.80 |
| Nifty Metal | 8813.25 | (-)6.60 | 9146.70 | 8622.20 |
| Nifty 50 | 23587.50 | (-)4.80 | 24258.70 | 23201.80 |
| BSE Sensex | 78041.59 | (-)5.00 | 80213.70 | 76788.60 |
End
Reported by Anshul Choudhary
Edited by Saji George Titus
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