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Metal stocks continue to reel under pressure; Nifty Metal down 9% this week

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The heavy sell-off in metal stocks was triggered by a decline in metal prices after China promised to release reserves to ease shortfall fears this week.

Metal stocks continue to reel under pressure; Nifty Metal down 9% this week
Metal stocks continued to reel under pressure with the Nifty Metal index falling over 4 percent on Friday. Shares of Vedanta, JSPL, SAIL, JSW Steel, Tata Steel, Coal India and NALCO were down 3-5.5 percent today.
The heavy sell-off in metal stocks was triggered by a decline in metal prices after China promised to release reserves to ease shortfall fears this week.
The Nifty Metal index has fallen 9 percent this week. In comparison, the benchmark Nifty is down around 1.5 percent for the week.
Among stocks, Adani Enterprises, JSPL, Vedanta, Coal India, SAIL, and JSW Steel fell 9-15 percent this week while Tata Steel, NALCO, MOIL, and Hindalco fell over 7 percent each. APL Apollo Tubes was the only Nifty Metal constituent in the green for the week.
China's National Food and Strategic Reserves Administration said on June 16 that it would release batches of metals, including copper, aluminium and zinc, making them available to manufacturers.
A massive sell-off was witnessed in commodity prices overnight after the news with Copper falling 4.5 percent, while aluminium, lead and zinc declining between 3 percent and 4.5 percent. Metals, that have been outperformers YTD, have hit a big speed bump, especially after the US dollar rose to a two-month high.
Recently, global brokerage house Credit Suisse downgraded the metal sector to ‘underweight’ due to many risks ahead and said the rise in global steel price may have run its course. It said that the impact of supply chain shock, which drove steel prices to record highs, was easing.
However, Nischal Maheshwari, CEO-Institutional Equities & Advisory, Centrum Broking, does not expect a severe correction in metal stocks as the demand continues to be strong.
Dhananjay Sinha, MD and Head Strategist at JM Financial, in an interview to CNBC-TV18, said he was cautious on the metal sector from the portfolio standpoint.
“We are looking at a correction in the commodity price hence the commodity stocks, which have run up by four-seven times over the last twelve months can start correcting,” he said.

Market Movers

CompanyPriceChng%Chng
Tata Motors295.55 -7.00 -2.31
Grasim1,549.50 -32.55 -2.06
Larsen1,611.75 -30.40 -1.85
Adani Ports680.05 -11.75 -1.70
Tech Mahindra1,131.00 -17.60 -1.53
CompanyPriceChng%Chng
Larsen1,612.00 -29.55 -1.80
HUL2,359.25 -19.40 -0.82
Reliance2,105.20 -15.80 -0.74
Asian Paints3,083.20 -21.25 -0.68
NTPC118.50 -0.80 -0.67
CompanyPriceChng%Chng
Tata Motors295.55 -7.00 -2.31
Grasim1,549.50 -32.55 -2.06
Larsen1,611.75 -30.40 -1.85
Adani Ports680.05 -11.75 -1.70
Tech Mahindra1,131.00 -17.60 -1.53
CompanyPriceChng%Chng
Larsen1,612.00 -29.55 -1.80
HUL2,359.25 -19.40 -0.82
Reliance2,105.20 -15.80 -0.74
Asian Paints3,083.20 -21.25 -0.68
NTPC118.50 -0.80 -0.67

Currency

CompanyPriceChng%Chng
Dollar-Rupee74.4000-0.0600-0.08
Euro-Rupee87.5450-0.0830-0.09
Pound-Rupee102.3880-0.0780-0.08
Rupee-100 Yen0.6730-0.0030-0.44