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Informist, Friday, Feb. 28, 2025

MUMBAI – Shares of metal companies are seen moving in a range next week, with the movement depending on overall market sentiment, analysts said. Shares of companies in the sector are at favourable valuations, but the depreciation of the rupee and weak demand from China continue to pose near-term challenges, an analyst tracking the sector said.

Metal stocks performed in line with the markets this week, the analyst said. Stocks of companies in the sector fell during the week on weak global cues and the general selling spree in the market, he said. Asked about US President Donald Trump's policies, the analyst said they are yet to kick in. Steel prices in the US have risen because of the import duty of 25%, which is a positive for the US steel sector, and a countervailing duty in India will have a similar impact, the analyst said.

Trump had announced 25% tariff on all aluminium and steel imports into the US. The tariff is not expected to make a significant impact on India as only 6-8% of the country's total aluminium exports go to the US, brokerage JM Financial said in a research report. However, trade flows may get impacted as countries exporting to the US may find other destinations for their products.

Canada supplies 60% of US aluminium imports, followed by the United Arab Emirates at 6% and China at nearly 4%, the brokerage said. It expects the imposition of reciprocal tariffs by the US to hit supply chains adversely, taking commodity prices higher and benefiting Indian companies overall.

Shares of steel companies have witnessed three rounds of consensus earnings downgrades since July, mainly led by a 10% fall in steel hot-rolled coil prices, Emkay Global Financial Services said in a report. This is due to rising imports and a slowdown in domestic steel consumption and government capital expenditure, the brokerage said. 

The Nifty Metal sectoral index fell 4.5% this week, as compared to a rise of 5.2% recorded the previous week. Shares of Hindalco Industries fell 2.9% and JSW Steel fell 3.2% this week. Shares of Vedanta fell nearly 10% during the week.

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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 Rajeev Pai

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