The metal index emerged as the top sectoral performer in Tuesday’s trading session, rising over 1 percent, as investor sentiment improved following China’s announcement of rate cut to support its economy amid trade tensions with the US.
China’s central bank — the People’s Bank of China — lowered its benchmark lending rates for the first time in seven months. This raised hopes of a potential increase in metal consumption, benefiting Indian metal exporters and producers.
According to an official release, the one-year loan prime rate (LPR) was reduced by 10 basis points to 3 percent from 3.1 percent, while the five-year rate, used mainly for mortgage and long-term lending, was cut to 3.5 percent from 3.6 percent. These rate cuts, largely in line with market expectations, mark the first such move since October, when both rates were slashed by 25 basis points.
Analysts said the rate cuts are aimed at boosting credit demand in the world’s second-largest economy, which could lead to higher demand for commodities like copper, aluminium, and steel. As China is one of the largest consumers of base metals globally, any signs of stimulus typically lead to a rally in global and domestic metal stocks.
The Nifty Metal index gained 1.43 percent intraday, extending its rally for the second consecutive session.
Hindustan Copper led the gains, rising 2.19 percent to an intraday high of Rs 231.61 on the NSE.
Steel Authority of India Ltd (SAIL) and Tata Steel also registered strong gains, rising 1.65 percent and 1.69 percent, respectively. Other prominent gainers included Hindalco Industries, Hindustan Zinc, and Vedanta, which advanced up to 1 percent.
Chinese banks lower benchmark lending rates after easing by PBOC
The Chinese government’s easing measures, which include rate cuts for re-lending tools and loans to policy banks, reflect a strategic attempt to stabilise growth as Beijing counters the effects of US-imposed tariffs and sluggish domestic demand.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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