Domestic commodity producers soared on May 20 after the world’s largest commodity consumer China cut its key lending rates by a record quantum to stimulate the economy ravaged by the latest outbreak of the COVID-19 and reemergence of lockdowns.
Futures of several metals in China soared 3-10 percent earlier in the day on expectations of more stimulus for the construction sector that will boost consumption of commodities.
China's surprise rate cut forced traders to cover the short positions in several metal companies' stocks due to overall concerns over global growth.
Indian producers will benefit from the surge in international prices of commodities, which is likely to feed into domestic prices. In recent weeks, domestic metal prices have softened following a steep correction in global commodities on fears of demand slowdown led by China.
Indian companies will also benefit from higher exports to China as and when demand picks up in that country, analysts said. Indian companies have ramped up exports over the past two years as domestic volume growth remained muted.At 10.56 am, the Nifty metal index was up 3.3 percent at 5,649.7 points.