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Informist, Friday, Feb. 7, 2024

MUMBAI – Shares of firms in the metal sector are expected to be range-bound next week amid earnings of major companies. Analysts said that Novelis Inc., the subsidiary of Hindalco Industries, will announce its financial results for the December quarter on Monday and will set the tone for the sector as it contributes around 60% to Hindalco Industries' revenue. Among other companies, Hindalco Industries, Steel Authority of India Ltd. and National Aluminium Co. Ltd. are scheduled to announce their results in the upcoming week. 

Friday, shares of metal companies surged after the Reserve Bank of India trimmed the repo rate by 25 basis points to 6.25%. A reduction in the repo rate is considered positive for the growth of infrastructure and real estate. The repo rate cut will ensure more money flows into the system, thereby increasing consumption levels and will improve the demand, the analyst said.

He expects the demand for metals to improve in Jan-Mar as it is a seasonally good quarter. Shares of Tata Steel, JSW Steel, and Hindalco Industries closed higher in the range 2-4% on Friday. Owing to this, the Nifty Metal index closed at 8585.80 points, up 2.7%.

Domestic demand in India remains healthy and is projected to grow by 8% in 2024-25 (Apr-Mar), brokerage IDBI Capital Markets & Securities said in a research report on Wednesday. Despite this, the rich valuations of steel companies limits the potential upside, the brokerage said, which maintained its neutral outlook on the steel sector.

Steel Authority of India Ltd. will come out with its December quarter results on Tuesday. The company's net profit is seen declining 48% on year to INR 1.71 billion, according to the average of 12 brokerage estimates. The estimates show that its revenue will grow 2% on year to INR 238.45 billion during the quarter. Hindalco Industries will release its results for the December quarter on Thursday. The company is expected to report a consolidated net profit of INR 35.31 billion for the quarter on revenues of INR 593.59 billion, according to an average of estimates from eight brokerage firms.

The Nifty Metal index rose 3.5% this week, as compared with a fall of 1.7% last week. Shares of JSW Steel rose 5% and Hindalco Industries rose 3.6% this week. On the other hand, Hindustan Zinc fell 1.3% this week. 

TOP HEADLINES
* NMDC Steel's net loss widens YoY to INR 7.58 billion in Oct-Dec
* Earnings Review: NMDC Oct-Dec PAT rises 30% on yr to 19.4 bln, sales up 21%

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: 

End

Reported by Akshita Kumar
Edited by Deepshikha Bhardwaj

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