The Nifty Metal index surged nearly 3 percent today, with Welspun Corp, Hindalco, National Aluminium surging nearly 5 percent. It was the top-performing index in a trade Tuesday. Experts told CNBC-TV18 that the rally continues to be on the back of a global surge in metals.
“Indian producers are price takers; whatever the global price, they follow the same trend," Rakesh Arora, MD of Go India Advisors told CNBC-TV18.
Indian capacity to produce steel is the second largest in the world. However, it is one-tenth of China's capacity. Steel prices tend to peak when inflation rises in China, he said.
"For them (China) to sell the excess material into the export market is easy and even if the export market is a bit reluctant to take on the higher cost steel, they can export the surplus out and maintain prices here,” Arora added.
Peter McGuire of XM Australia believes metal stocks will continue to go upwards from here.
"A lot of the base metals had a stellar run over the 6-9 months and there is probably a further upside in aluminium. So the continuation of demand picture, the global situation with infrastructure, stimulus lead recoveries I am pretty sure that a lot of these markets will continue to beat up from here," McGuire said.
For entire discussion, watch the video