More Stories

Informist, Friday, Apr. 25, 2024

MUMBAI – Shares of metal companies are expected to be in range until outlook for global economic growth improves. At the same time, analysts expect shares of domestic steel makers to rise once outlook on growth improves owing to strong demand for steel in India. Stock-specific action is likely as earnings season is in full swing with Jindal Steel & Power set to report its quarterly earnings on Wednesday and Jindal Saw on Friday.
 

While the 90-day pause in reciprocal tariffs by the US has helped stock prices recover in the past two weeks, any significant gains in the near term are unlikely as the base 10% tariffs are still present and trade tensions between the US and China have raised concerns of poor demand for metals, analysts said.

"The worsening of US-China trade relations has increased the risk of global demand and economic slowdown over the past month," brokerage Prabhudas Lilladher said in a note Wednesday. "China being a major consumer of commodities, further weakness in the economy (which has already been soft over the last few years) can add to the ongoing uncertainty."

While global growth outlook remains bleak, analysts said Indian steel companies are better placed, especially after the Indian government imposed 12% safeguard duty on some imported steel products. Cheap imports from China are expected to decline in the next few months owing to the duty in place.

"Chinese steel prices at USD455/tn are already very close to their cost of production, and marginal steel players are likely to start incurring losses," Prabhudas Lilladher said.

The brokerage has a 'buy' rating on Hindalco Industries, Tata Steel, Jindal Stainless, and National Aluminium Co. with target price at INR 736, INR 173, INR 655, and INR 181, respectively. Owing to the safeguard duty, the brokerage said any fall in operating profit of steel makers will be limited. "A significant portion of the incremental USD70/t safeguard duty is expected to add to companies' EBITDA, and steel prices are likely to trade within a range.." the brokerage said.

HDFC Securities was also positive on steel makers on strong outlook for domestic demand. "Steel demand in India has been growing at a solid pace, consistently outpacing other major economies," it said. The brokerage has a 'buy' rating on Tata Steel, JSW Steel, Jindal Steel & Power with target price at INR 155, INR 1,080, and INR 1,050, respectively.

TOP HEADLINES

* See steelmakers' EBITDA/tn rising up to INR 1,300 on safeguard duty - CRISIL
* Jindal Stainless, AB Energia Solutions commission solar project in Odisha
* Vedanta promoter group cos issue $530-mln guarantee in favor of Twin Star
* Odisha HC stays pollution board order asking Vedanta to pay INR 711.7 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 Deepshikha Bhardwaj

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.