The Nifty Metal Index surged over 2% during intraday trading on Tuesday, buoyed by strong performances from key metal stocks. Leading the charge were National Aluminium Company (NALCO) and NMDC, both of which saw gains of nearly 5% or more.
Other major players in the sector, including Steel Authority of India (SAIL), Vedanta, Tata Steel, and Hindalco, also posted significant intraday gains, adding to the sector’s rally.
Even stocks like Hindustan Copper, Hindustan Zinc, and Jindal Steel and Power witnessed substantial price increases, further boosting the overall performance of the metal index.
China Stimulus Boosts Market Sentiment
The rally in metal stocks was attributed in part to China’s recent economic stimulus measures. On Tuesday, China’s central bank lowered the amount of cash banks are required to hold in reserve and also cut a key interest rate to stimulate its struggling economy, according to news reports.
As the world’s largest consumer of commodities, any improvement in Chinese demand can have a significant ripple effect on global demand and prices. Analysts believe that a stronger Chinese economy could lead to an upswing in global commodity prices, benefiting metal companies globally.
Steel Stocks Respond to China Developments
Steel stocks have also been reacting positively to China’s latest stimulus efforts. Tata Steel, Jindal Steel and Power, and SAIL share prices saw significant gains on Tuesday, with NMDC also joining the rally. NMDC’s share price climbed as much as 4.65% on the BSE during intraday trading.
This comes after months of pressure on steel prices in India, which have been impacted by soft global steel prices. Weak domestic demand in China and rising exports from the country have weighed heavily on global steel prices.
Non-Ferrous Sector Also Gains Momentum
In the non-ferrous metal space, NALCO emerged as a top gainer with a rise of over 5%, while Vedanta Ltd and Hindalco Industries saw intraday gains of up to 4.5%. The entire metal sector responded positively to the global cues stemming from China’s economic measures, further boosting market confidence.
Anand Rathi Analyst on China’s Development
However, Anand Rathi Research analysts warned that while China’s piecemeal stimulus efforts over the past few quarters have not yet led to a substantial revival in the sector, a more robust intervention may be needed for a meaningful recovery. “Unless the government undertakes a substantial stimulus, the near-term outlook will be bleak,” they said in a note.
According to Anand Rathi Research, China’s steel exports from January to August 2024 rose 19% year-on-year to 70.72 million tonnes.
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