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Informist, Friday, Aug. 29, 2025

MUMBAI – Shares of metal companies are expected to trade lower next week amid a broad-based sell-off in the Indian equity market. The imposition of punitive 25% tariffs on Indian goods by the US, due to New Delhi's continued purchase of Russian crude oil, is likely to continue driving selling pressure in the market, consequently impacting metal stocks, analysts said.

On the other hand, policy changes in India and China, through safeguard duty and an anti-involution campaign, are positively addressing the supply side of the steel market, Emkay Global Financial Services. While domestic demand remains subdued, the market is pinning its hopes on a post-monsoon recovery, government capital expenditure, and reforms to the goods and services tax, the brokerage said. These recent developments may lead to a tighter pricing range, adding duration to earnings and potentially boosting valuation, the report said.

Market participants will also focus on Prime Minister Narendra Modi's visit to China to attend the Shanghai Cooperation Organization Summit in Tianjin from Aug. 31 to Sept. 1. Any positive talks related to the metal sector would provide some support to metal stocks.

"The extension of safeguard duty for three years is resulting in a partial decoupling of parity in import pricing (linked to China's steel prices)," Emkay said. Domestic steel prices are currently at a 9% discount to the import prices. The safeguard duty will reduce imports, as opposed to raising domestic prices to bring them back to the point of coupling, Emkay said.

Futures contracts of aluminium on the Multi Commodity Exchange of India and the London Metal Exchange rose Friday due to concerns about supply. Market participants are now awaiting China's Manufacturing Purchasing Managers' Index data, due Sunday, for further cues about demand in the country.

"We believe this decoupling would benefit the industry in setting its own prices (tracking the domestic supply-demand backdrop), while also making it less vulnerable to China's macro data – weak/volatile for several years now," the brokerage said. As long as domestic prices remain at a discount to import prices, imports could essentially reduce, thereby strengthening the domestic supply-demand balance and achieving inventory drawdowns, which would be favourable for prices and profitability." 

The Indian equity market is expected to fall further next week due to dampened investor sentiment following the additional US tariffs and lack of positive developments on a trade deal with the US, analysts said. Moreover, the fall in the rupee against the dollar is likely to further drag down the market, which is affecting foreign fund inflows, analysts said.

The Nifty Metal index snapped a three-week rising run Friday. The index closed 0.6% lower at 9154.80 points. The Nifty 50 closed at 24426.85, down 74.05 points or 0.3%. The BSE Sensex ended at 79809.65, down 270.92 points or 0.3%. The metal index is currently trending downward and has declined by nearly 3% over the past 30 days. 

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* India July crude steel output up 14% on year, says World Steel Association

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 Simran Rede

Edited by Saji George Titus

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