Global demand-supply mismatch post-recovery led to rally in metal stocks: Mitul Shah of Reliance Securities

A) Nifty50 remained volatile during the week based on the quarterly performance of largecap companies reported during the week.

Few companies delivered a subdued performance like Tata Motors, MSIL, while IT companies continued outperformance. These results and few global factors on the third wave are driving action on D-Street.

A) FIIs withdrawal from Indian equity is fueled by movement in US markets, currency movement, and economic development in global markets.

Moreover, fear of the third wave in few parts of India coupled with valuation discomfort led to profit booking in few large-cap stocks.

Below par results reported by few large cap companies and weak commentary also resulted in lack of investors’ confidence recently.

A) Small and midcap companies outperformed strongly in the last 4-6 months with catch-up in valuation.

We believe despite sharp price run-up, many quality smallcap/midcap companies are below historical peak valuation providing decent potential upside from the current level.

A) Globally demand-supply mismatch during post recovery phase is the key reason behind positive traction for metal stocks.

Production level for metals in China is still below pre-Covid level, while sudden demand spurt during recovery from pandemic led to a wider gap between demand-supply, which supported the positive move for metal stocks globally.

A) We are positive on Bharat Forge, Ashok Leyland, JK Lakshmi Cement, HCL Tech and Tech Mahindra.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.