Metal stocks were hammered at the bourses on Monday. This was because of disappointing inflation data from China, the biggest buyer of base metals in the world.

The metal sector index fell by 391 points or 3.44 per cent on the BSE on Monday at 11,356 while the broader Sensex fell by 1.51 per cent or 264 points to settle at 17,223. Hindalco, Jindal Steel and Sterlite were the top three losers in the sector. Hindalco was down by 5.18 per cent at Rs 126.20, Jindal Steel was down at 4.39 per cent at Rs 507.70 and Sterlite was down by 4.34 per cent at Rs 105.80 on the BSE. Of these three, Jindal Steel has the highest weight in the metal index at 15 per cent.

According to government data released in China, the country's inflation rebounded at 3.6 per cent in March from 3.2 per cent in the previous month.

“Chinese inflation rose above expectation. It hinted that the government may not rush towards any stimuli, which caused selling pressure in metal stocks as China is the largest consumer of metals especially base metals,” said Mr. Alex K Mathews, Head Technical and Derivatives Research, Geojit BNP Paribas Financial Services.

Disappointing inflation data from China aside, the country's falling imports of crude oil and base metals in this quarter have also contributed to the downward sentiment in the metal market, according to Mr Nitin Nachnani, Research Analyst at Geojit Comtrade.

However apart from global factors, domestic market sentiments also contributed to the fall in metal stocks on Monday.

“All the negative news over the last four days when the markets were shut was felt when the markets re-opened on Monday. FII buying in our markets has come down drastically recently and its impact is being seen on metals as it is one of the high beta counters,” added Mr Nachnani.

At Angel Broking, the neutral rating for metal stocks has been retained. “We don't see an upside on most of the metal stocks,” added Mr Bhavesh Chauhan, Analyst, Metals and Mining, at Angel Broking.

> manisha@thehindu.co.in

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