The Nifty Metal Index gained 1.87% while the benchmark Nifty advanced 0.13% on Monday.
National Aluminium surged 4.35% on Monday followed by Hindalco which gained 4%. Hindustan Copper, Vedanta, Jindal Stainless Steel and Tata Steel rose over 3% each while Steel Authority of India and Jindal Steel & Power moved up over 2%.
Analysts said that after the recent correction in metal stocks, the valuations have come off, however, they remain cautious on the sector due to challenges posed by Chinese imports.
“Metal stocks have corrected 15-20% from recent peaks which has made sector valuations relatively attractive although not very cheap,” said Tushar Chaudhuri, Research Analyst, Prabhudas Liladher.
Metal Stocks
“The recent news such as the government initiating an anti-dumping probe on Vietnamese HRC imports, and 9% MoM lower China monthly steel production are taken positively by investors.”
Chaudhari said the uptick in Hindalco could be due to the supportive LME aluminium prices.
The Directorate General of Trade Remedies (DGTR) launched an antidumping investigation into HRC im ports from Vietnam however, Vietnam reciprocated the investigations for steel imported from India. ICICI Securities said that while the step is reciprocal, it is a positive step given that domestic HRC prices are at the lowest levels since December 2020. The investigations could lead to some uptick in HRC prices in the domestic market.
“While we believe that this is a positive step, its efficacy is likely to be limited as China (and not Vietnam) is the major exporter of steel to India,” said analysts Amit Dixit, Mohit Lohia and Pritish Urumkar.
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