Comments
Stock prices of major metal companies including Hindalco Industries, Hindustan Zinc, Vedanta, JSW Steel, Kalyani Steel and Tata Steel touched fresh 52-week highs on Friday.
Steel majors got a fresh boost due to government’s favourable measure of imposing anti-dumping duty on cold-rolled flat products. Less than a fortnight ago the Centre had imposed the same on hot-rolled flat steel products. Non ferrous metals companies saw renewed interest due to ban on lead and zinc mines by the Chinese government.
Vedanta, Cairn surgeOther companies such as Hindustan Copper, NMDC and MOIL also witnessed a rub-off effect and touched fresh 52-week highs. Vedanta, along with Cairn, touched fresh 52-week highs after the company’s CEO expressed confidence in successfully merging the two companies.
“All LME metals have advanced 7.3 per cent in 2016, with zinc gaining 33 per cent and nickel rising 15 per cent,” said G Chokkalingam, founder, Equinomics Research and Advisory.
The outlook on the ferrous companies is sustainably better than the non-ferrous companies. ICICI Securities recently upgraded Tata Steel and JSW Steel stocks as it believes that import-driven earnings volatility is a thing of the past.
Both-way beneficial“On a cumulative basis, these duties now cover 80-90 per cent of the product portfolio for domestic steel producers. While the relief from imports provides a support to realisations, it provides valuable time to the domestic industry to sail through the current weak domestic demand which has been less than 1 per cent during FY17 till date. Players such as Tata Steel and JSW Steel have 55-60 per cent of their portfolios covered under the current safeguard / provisional anti-dumping determination,” the report said.
Most analysts are cautious on Hindalco due to stiff valuation and see limited upside in the stock. Outlook on NMDC is negative due to supply concerns in the domestic market and cash outflow on account of buyback but the same is robust on MOIL as rise in steel prices augur well for manganese ore producers.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.