Steel stocks in India are expected to do well going forward, said Pinakin Parikh, metal analyst, JP Morgan, adding that the steel companies have seen the best earnings environment in India over the last many years.
“It is probably the best earnings environment we have seen for steel companies in India over the last many years. You throw in the rupee depreciation, you throw in very strong domestic demand and the fact is that there is no new supply on the horizon at least for the next two years,” said Parikh.
“From a trade war perspective, the impact so far has been more on the financial side ... the environment so far is much more positive for the ferrous side. For non-ferrous, we need to wait and see once this entire noise settles down as to what is the actual impact on demand is, because the fact is that YTD, there has been a very large amount of destocking we have seen across the base metals complex,” he said.
“Steel upcycle which was essentially started about 18 months back was supply driven. So China cut the capacities, they cut production and at the same time demand ex-china went up,” Parikh added.