Metal company stocks gained the most on Tuesday, fuelled largely by better-than-expected economic growth posted in China, one of the world’s largest consumers of metals. Slightly missing its official target of 7.5 per cent, China reported a GDP growth of 7.3 per cent in the December quarter, beating the 7.2 per cent forecast by analysts. The BSE metal index was up 306 points at 10,409.

Major gainers were Sesa Sterlite (5 per cent), Tata Steel (4 per cent), Hindalco Industries (3 per cent), Jindal Steel (3 per cent), JSW Steel (3 per cent), NMDC (3 per cent), Coal India (1 per cent), Hindustan Zinc (1 per cent), SAIL (1 per cent) and Nalco (1 per cent).

The slowest growth in China, has rekindled market hopes that its central bank would pump in billions of dollar to support growth. Economists expect China’s economy to grow at about 7 per cent this year.

Demand to remain strong

Apart from better-than-expected economic growth in China, the demand for metals in the domestic market is expected to remain strong with the government reviving investment in infrastructure projects. The government is also finding solutions for other issues faced by the industry.

The e-auctioning of coal blocks and mineral resources will ease pressure on the industry by bringing down the cost of operations. The profitability of metal companies will improve with stable demand and lower cost of production.

Vinod Nair, Head — Fundamental Research, Geojit BNP Paribas Financial Services, said in the last two days prices across metals have recovered on hopes that the European Central Bank may finalise a decision to infuse liquidity of $500-600 billion to support the economy.

“The decision is expected to boost overall demand and increase metal prices. Chinese economy may also recover with their central bank extending financial support,” he said.

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