Metal stocks rally with Tata Steel, JSPL up over 3% as rate cut spurs demand hopes

Shares of metal companies surged after the first MPC under RBI's new Governor Sanjay Malhotra cut the central bank's repo rate by 25 basis points to 6.25 percent on February 7. The Nifty Metal index was over 2 percent higher to 8,551.55, as seen at 11.18 am, after the rise in the stock prices.

A cut in the repo rate is considered a positive for the growth of infrastructure and real estate. Metal stocks shine on such prospect, being a necessary raw material in such developments.

The shares of Jindal Steel and Power were up nearly 4 percent to trade at Rs 842 apiece, while Tata Steel jumped over 3 percent to trade at Rs 137 apiece.

Welspun Corp shares also jumped nearly 3 percent and were trading at Rs 770 apiece, while Adani Enterprises was up 2.57 percent to Rs 2,371.80 apiece. JSW Steel stock was up 2.55 percent at Rs 972.60 per share.

The other stocks which recorded strong gains included National Mineral Development Corporation (up 2.33 percent), Vedanta (up 2.21 percent), National Aluminium Company (up nearly 2 percent). Shares of SAIL, Hindalco, Hindustan Copper and Jindal Stainless Limited were trading over 1 percent higher than their respective previous closing prices. APL Apollo and Hindustan Zinc shares were trading with minor gains.

Ratnamani Metals & Tubes shares however were trading in the red, down nearly 2 percent at 2,796.05 apiece.

The RBI has reduced its repo rate by 25 bps to 6.25 percent, the first rate cut since May 2020. It has kept its stance at 'Neutral'.

In May 2020, the RBI had lowered the repo rate to 4 percent to cushion the economy from the COVID-19 pandemic's impact. Since then, the central bank has raised the repo rate seven times to 6.5 percent.

The central bank projected GDP growth for the next fiscal at 6.7% and kept its inflation forecast unchanged for the current financial year. It has kept the Consumer Price Index (CPI) inflation projection at 4.8 percent.

Notably, the rise in stock prices of companies listed in India comes amid a rally in Chinese real estate stocks.