Market

Metal stocks rise on increase in steel prices

Updated : December 03, 2020 11:49 AM IST

The metal index rallied over 2 percent with all its constituents in the green. In comparison, the Nifty50 index was up around 0.2 percent.

Morgan Stanley said that it sees a potential further hike in prices in December.

Price hikes, even if sustained for a few months, could drive earnings upgrades, added the brokerage.

Shares of metal companies jumped on Thursday after steel firms hiked prices again by $25-35 per tonne after a sizeable hike in the previous month. Steel prices in India had rallied by Rs 4,000-5,000 per tonne (10-13 percent) MoM in November 2020.

The metal index rallied over 2 percent with all its constituents in the green. In comparison, the Nifty50 index was up around 0.2 percent.

In the Nifty Metal index, Hindalco, Tata Steel, SAIL, NMDC rose between 2-4 percent. Other stocks like JSPL, NALCO, Coal India, JSW Steel were also positive for the day.

In a recent report, brokerage house Morgan Stanley said that it sees a potential further hike in prices in December.

Price hikes, even if sustained for a few months, could drive earnings upgrades, added the brokerage. It prefers Tata Steel and JSPL among steel companies.

The index posted its best-ever monthly performance in November on the back of a surge in steel prices in the domestic market. It rallied over 25 percent against a 12 percent rise in Nifty in the month.

In another report, brokerage Motilal Oswal said that domestic hikes are being supported by higher regional prices, which in turn are being driven by a sharp rise in Chinese domestic steel prices. Steel stocks like SAIL, Tata Steel and JSPL should benefit the most by rising prices.

The improvement in EBITDA per tonne should be even higher on an improving sales mix, Motilal Oswal suggested. It also raised EBITDA estimates by 3-12 percent for FY21 to factor in higher spreads. Among stocks, JSPL is MOSL's preferred pick in this sector followed by JSW Steel.

Metal stocks rise on increase in steel prices

You May Also Like

Bharat Biotech's Covaxin led to 'enhanced immune responses' in phase 1 trials, says Lancet

Phase 1 trial results show Covaxin has tolerable safety, enhanced immunity: Lancet study

Closing Bell: Sensex ends 746 points lower, Nifty down 1.5%; banking, metal sectors drag most

Trending on CNBC-TV18

recommended for you