Metal stocks recorded notable gains on July 3 after data showed that China's services activity growth slowed to a multi-month low in June. The rise in the stocks pushed the Nifty Metal index up nearly 0.6 percent to hover around 9,756.
The Caixin/S&P Global services purchasing managers' index (PMI) fell to 50.6 in June, as against 51.1 in May. This marked the weakest growth in services activity recorded by the private survey since September 2024.
In its report, Caixin analysts noted that the external demand remained weak on the wake of US tariffs, which in turn impacted business optimism in the country. "Supplier logistics were delayed slightly. The supply chain was relatively strained, and transportation experienced delays. Supplier delivery times lengthened for a fourth consecutive month," said Wang Zhe, Senior Economist at Caixin Insight Group.
"Overall, manufacturing supply and demand recovered in June. External demand still faced downward pressure, and employment continued to shrink, while prices remained weak. Logistics were delayed moderately, with manufacturing purchases declining and inventories remaining stable. Businesses became less optimistic," Zhe further said.
The analyst noted that the external environment remains severe and complex, in the midst of increasing uncertainties. "The issue of insufficient effective demand at home has yet to be fundamentally resolved," he added.
Slowing growth in China's services sector affecting its metal companies will likely give a competitive edge to Indian metal companies. The sharp fall in dollar index continued to support metal stocks.
NMDC shares were the top gainer on the index, jumping nearly 2 percent to trade at Rs 69 apiece. Hindalco shares followed, rising over 1 percent to hover around Rs 706 apiece. Jindal Steel and Power (JSP) and Jindal Stainless Steel shares gained nearly 1 percent.
National Aluminium (Nalco) and Tata Steel shares rose around 0.8 percent, while Hindustan Copper and Hindustan Zinc shares gained over 0.3 percent. The shares of Steel Authority of India (SAIL) and Adani Enterprises were trading in the green with marginal gains.
Bucking the trend, JSW Steel, APL Apollo Tubes, Welspun Corp and Vedanta shares were hovering in the red with marginal losses.
Notably, the Nifty Metal index has now extended gains for the third consecutive session, gaining over 2.3 percent during the period so far.
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