In the present carnage, no doubt most stocks have been badly hit. Among the worst could be the mining and metal stocks. The worries are that the global slowdown, probably aggravated by the imposition of trade tariff on China, will lead to a recession and hence an impact on the metal sector.
Mining stocks hit 52-week lows
Coal India recently hit its lifetime low of Rs 178. Nobody has seen Coal India hit such low levels, since going public. NMDC too trades at a 52-week low and is India's top iron ore mining company.
Nothing different for copper to oil and gas explorer Vedanta, whose shares are trading at Rs 130, which is very close to its 52-week low of Rs 125, hit on Aug 23. Nobody seems to be interested at taking a look at metal stocks.
However, a slight easing of trade tariff wars between the US and China, could send a stock like Tata Steel soaring. The latter too has hit a 52-week low price of Rs 324, when compared to a 52-week high price of Rs 642.
Clearly, most metal companies have seen their share prices halve from 52-week highs.
Should you invest if you are a long term investor?
There is no harm buying into good quality metal stocks. At least some of them could give decent returns to investors. It's often very difficult to determine the best price to buy a stock and whether things will turn worse before turning better.
The only one thing that one can say is that good prices and good news do not go together. If you have good news, the price of shares is very high. On the other hand bad news like currently, offers an opportunity to enter into stocks at great prices. For those willing to take a risk, it may not be a bad idea to accumulate certain metal and mining stocks.