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2 Major Reasons Why Nifty Metal Sank 7% Today


China's Evergrande's crisis as well as the US Fed created an overhang on the Indian markets, which trembled and ended lower by 1 percent on the Nifty. The volatility index spiked to 14.84.

2 Major Reasons Why Nifty Metal Sank 7% Today

Amid such a chaotic trading day, all of the indices barring the FMCG back ended in the red, with the most jolt on the metal index, which settled lower by as much as 6.6 percent, with major losers from the pack being Tata Steel, Jindal Steel, NALCO, NMDC, JSW Steel, Vedanta and Hindalco all ending with losses between 5-10 percent.

Now coming to the reasons straight away:

1. Gst council meet rate hike decision on metals to 18 percent

The 45th GST Council meet approved hiking the GST on iron ore and manganese ore. Likewise, the decision was taken to approve hike in GST in nicket, copper and zinc. The rate on metals has been hiked from 5 percent to 18 percent.

There is a view that amid commodity cycle boom, metal stocks rallied hugely with no major correction and the current weakness is expected to persist for few more trading sessions. The cautious view is advised by stock market experts.

2. Evergrande crisis in China is another big reason:

There is a fear that the current downside in iron prices will continue given the likely default by the Chinese real estate major. The fear that the likely default to the tune of $83.5 million by Evergrande on its offshore bonds on Wednesday will lead to a slump in the commodity demand in the Chinese markets, which also happens to be the biggest consumer of metals.

Read more about: nifty metal tata steel
Story first published: Monday, September 20, 2021, 22:26 [IST]
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