Metal companies seem to have bucked the bearish trend in the stock market. The metal index gained 132 points at 11,241 on Thursday, while the benchmark Sensex closed lower by 22 points at 19,454. This was largely due to an increase in global metal prices on rising demand from China, signalling an economic recovery.
Hindalco gained three per cent at Rs 133 while Jindal Steel and JSW Steel jumped two per cent each to Rs 471 and Rs 824. Tata Steel was up two per cent at Rs 431. Vedanta Group companies Sesa Goa and Sterlite Industries also ended in the green. Deven Choksey, Managing Director, KR Choksey Shares and Securities, said metal stocks are getting re-rated after the recent rise in metal prices. Being the growth engine of the world, a recovery in the Chinese economy bodes well for the coming year, he said.
Moreover, permits given in the US for home-building touched their highest level in the last four-and-a-half years in November.
Though the steel demand in India would dictate the profitability of Indian companies, domestic metal prices are fixed close to import prices. This is done to deter large-scale imports into the country.