Metal shares were trading positively on November 13 trading session due to various reasons, including US government reopening cheer, India imposing anti-dumping duty for five years on some steel products from Vietnam.
Hindustan Zinc, Vedanta Ltd, Tata Steel led the gains in the sectoral index by rising 3%, 2.5% and 1.8%, respectively.
At 12:12 pm on November 13, Nifty Metal index was trading 1.3% higher at 10,679.
Here are various reasons behind rise in metal shares:
US government reopening cheer
US President Donald Trump signed legislation ending the longest US government shutdown, to clear fog on US economic data, amid firming bets of a December rate cut by Federal Reserve.
The shutdown, which began on October 1, had halted the release of critical economic data, including payroll and inflation reports.
Economists said the U.S. Labor Department's statistical agency should prioritise the production of November employment and inflation reports to ensure Federal Reserve officials have up-to-date information at their December policy meeting.
"One of the arguments now is with reopening, we should get a lot of data coming through that will give more clarity for (Federal Reserve Chair Jerome) Powell to say: 'I'm cutting rates because of this,'" Damian Rooney, director of institutional sales at Perth-based stockbroker Argonaut told Reuters.
Silver rise
COMEX December silver contract hit fresh record high of $54.42 per ounce as traders turned their attention to the Federal Reserve’s interest-rate outlook following Washington’s reopening. Consequently, Hindustan Zinc shares rose 3% on November 13 as it is India’s only integrated and listed silver producer.
Vietnam steel duty
India has imposed a five-year anti-dumping duty on some steel products originating from Vietnam, according to a government notification dated November 12, citing injury for the domestic industry.
Vietnam exported 0.9 mn tonnes of steel to India in FY25 (10% share in imports). Hoa Phat is the largest steel producer in Vietnam and exempting it will dilute the impact of anti-dumping duty to a large extent. However, it seems that the government has attempted to stop the circumvention of Chinese steel through Vietnam, said a brokerage, reported CNBC-Awaaz.
The provisional safeguard duty of 12%, lapsed on November 7, is likely to be extended for 3 years in coming days, the brokerage added.
SAIL, Tata Steel, JSW Steel, JSPL shares were trading 0.75%-1.8% higher.
Tata Steel stock was also among top gainers in metal index over four-fold Q2 profit jump on strong demand in key markets such as Netherlands, India.
Optimism over Fed rate cut
The Fed will again lower its key interest rate by 25 basis points next month to underpin a weakening labour market, according to 80% of economists polled by Reuters, up slightly from a poll taken last month.
Atlanta Federal Reserve President Raphael Bostic said he would retire in late February. Since Bostic had voiced concerns about high inflation and was cautious about rate cuts, BCA's Tunkel said investors may expect a more dovish replacement, since the White House favors lower rates. The U.S. president does not select regional Fed presidents but appointments are approved by the Fed's Board of Governors, which President Donald Trump is trying to reshape.
Metals tend to do well in a low-interest-rate environment.
With the government shutdown delaying key economic data, the real challenge isn’t the short-term drag on growth — it’s the increasing difficulty for investors and the Fed to gauge the economic outlook, Seema Shah at Principal Asset Management told Bloomberg.
“As data releases resume, the case for a Fed rate cut in December should re-emerge, reinforcing a risk-on backdrop,” she said. “This environment favors US equities, particularly Big Tech and cyclicals poised to benefit from a more accommodative Fed stance.”
Record low retail inflation
Retail inflation fell to a record low of 0.25% in October following cut in GST rates on nearly 380 items of mass consumption coupled with subdued prices of vegetables, fruits and eggs. This could give space for Reserve Bank of India to announce a rate cut next month.
October Consumer Price Index (CPI)-based inflation was lowest in the current series (base year 2012), which captures data since January 2014.
The inflation was 1.44% in September and 6.21% in October 2024.
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