Hindalco, Tata Steel, other metal stocks rise up to 7% on dollar decline, China stimulus hopes

Metals

Metal stocks recorded significant gains on March 6 as investors remained optimistic over China's stimulus package and decline in the strength of the US dollar. The rally in the stock prices pushed Nifty Metal up by nearly 3 percent to 8,918, extending gains for the fourth consecutive session.

Jindal Stainless Limited (JSL) was the top gainer on the index, rising nearly 7 percent to trade at Rs 654 apiece. After hitting a 52-week low of Rs 568 per share on February 17, the stock has now recovered nearly 15 percent from that level. It is, however, still down nearly 23 percent from the 52-week high of Rs 848 per share, which it hit in July last year.

The shares of Ratnamani Metals and Tubes jumped over 4 percent to trade at Rs 2,658 per share, while Welspun Corp and Hindalco traded over 4 percent higher at Rs 790 and Rs 684 respectively.

Stock of heavyweight Tata Steel meanwhile jumped nearly 4 percent to trade at Rs 151.86. The rise in the stock's price was the top contributor to the rally in Nifty Metal. The stock is currently significantly higher than its 52-week low of Rs 122.62, which it had hit in January this year.

Hindustan Zinc, Vedanta Limited, Hindustan Copper and NMDC stocks rallied over 3 percent, while Jindal Steel and National Aluminium Company (NALCO) rose over 2 percent.

JSW Steel, Adani Enterprises and SAIL stocks were trading in the green with minor gains.

APL Apollo Tubes , however, bucked the trend to trade in the red with marginal losses. The stock fell nearly 0.6 percent to Rs 1,466 apiece.

Market participants are expecting more stimulus measures from Chinese authorities to bolster consumption and cushion the economic impact of an escalating trade war with the United States, amid harsh tariffs being imposed by US President Donald Trump.

"Base metals rallied in Asian trade on the prospect of further China stimulus measures," Daniel Hynes, senior commodity strategist at ANZ Bank told Reuters.

Further, the dollar index slipped to a four-month low on Thursday, making the greenback-priced commodities cheaper for buyers holding other currencies. This is considered favourable for emerging markets like India.

"European defence spending measures are also boosting (metals') growth outlook while simultaneously weakening the U.S. dollar," Kyle Rodda, a senior financial markets analyst at Capital.com told Reuters

Earlier yesterday, the steel stocks surged significantly after China announced that it would restructure its steel industry to cut its total output. The latest move by China is expected to reduce the dumping of cheap steel into the Indian market, which would act as a major positive to the domestic steel companies.

(With inputs from Reuters)