Shares of metal companies came under fire on October 8, with names like NMDC, NALCO, Tata Steel and JSW Steel plunging 3-5 percent after China state planner announced a roadmap to boost the economy, but lacked new plans for major stimulus, crushing hopes of investors. In addition, a sharp fall in SGX iron ore prices also weighed heavily on manufacturers of the steel-making ingredient.
A much awaited press briefing of officials of China's National Development and Reform Commission happened today, where the state planner, despite showcasing confidence to reach its economic target this year, failed to deliver more major stimulus towards the economic revival. The state planner also did not announce any major details on the fiscal policy at its press conference. This utterly disappointed investors who were hoping for more fuel to fast track the economic revival.
The wave of previous actions had fuelled hopes for additional fiscal stimulus worth trillions of yuan to restore confidence, though doubts still linger over its ability to sustain long-term growth. China's leaders are targeting around 5 percent growth this fiscal, however, recent economic data suggest this goal may be difficult to achieve, with sluggish consumer spending and a persistent property downturn. Adding to the challenges are rising trade tensions, which are putting pressure on new growth drivers like electric vehicle exports.
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A combination of these factors raised concerns over the possibility that China's economic revival may still be some time away, meaning that demand for metals may continue to falter amid sluggish growth in the world's largest metal importer.
This also soured sentiment for Indian metal companies, dragging them down into sharp losses. At 09.51 am, shares of NMDC, NALCO, JSW Steel and Tata Steel were down 2-5 percent, pulling the Nifty Metal index over 2 percent lower. Other metal names like Hindalco, Vedanta and Jindal Steel were also down 1-2 percent.
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