Tata Steel, Adani Ent, Vedanta, NMDC, SAIL, Others: Near-Term Strategy For Investment In Metal Stocks

Metal stocks have rallied impressively in a month with the exceptions of the flattish performance of Adani Enterprises and Jindal Stainless. Metal stocks witnessed a bullish trend over the past few weeks owing to early-rate cuts expectations, coupled with the gradual stabilization of the Chinese economy which is expected to support Indian domestic players in steel pricing. With election polling to kick start from April 19, here are the near-term strategies in metal stocks.

Data from NSE showed that under Nifty Metal Index, in 30-day performance, Vedanta and its arm Hindustan Zinc outperformed its peers with gains of 39.5% and 36.32% as of April 16. While Hindustan Copper and NALCO also gained by 31-33%.

Two leading PSUs namely NMDC and SAIL gained by 18-19% in a month. While Hindalco was up by 14.6%, followed by JSPL which gained by 11.6%. Stocks like JSW Steel, Tata Group-backed steelmaker Tata Steel, Ratnamani, and Welspun Corp climbed between 5-10%.

Meanwhile, Adani Enterprises, JSL, and APL Apollo's monthly performance is flat as of now.

In its research note, Equichain Wealth Advisors highlighted three key strategies for metal stocks. They are:

- Interest rate heading southwards is positive for metal stocks as it would boost risk-on sentiment.

- China continues its effort to boost the economy and recovery is seen in metal prices along with Gold & Silver prices.

- Domestic consumption for infrastructure remains strong and it is one of the key factors for metal
companies in India.

Giving its outlook, Equichan's note said, "Metal stocks would provide good opportunity in case of any correction in near term, positive trigger such as soft interest rate, China's stimulus package and domestic growth story are all the positive factors with medium to long term view or we can see trend remains positive with 4 - 8 quarters view. "

Currently, brokerage Motil Oswal is BUY on Coal India, Hindalco, NMDC, and JSPL. While it is neutral on rest of the metal stocks.

Latest research of Elara Capital further said, "We maintain a cautious stance on flat steel prices in CY24, given
capacity ramp-up by NMDC and JSPL, with upcoming capacity addition by JSW Steel and Tata Steel. Higher exports from China also continue to be an overhang on global steel prices."

Elara's note added, "On the domestic front, upcoming elections may keep demand range-bound, near term. But we expect the recent correction in coking coal and iron ore prices to partially mitigate the adverse effects of weak steel prices.

The Lok Sabha Election voting will start from this week. Voting will be held for the election of 543 members of the 18th Lok Sabha from April 19 to June 1. The elections will be carried out in seven phases, while the outcomes of the polling will be announced on June 4, 2024.

Upcoming Q4 earnings and possible dividend announcements will be among key triggers for sentiments in metal stocks.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.