Shares of metal companies rallied on March 17, pushing the Nifty Metal index up by nearly a percent, helping snap its two-day losing streak, as dollar weakened amid America's looming threat of reciprocal tariffs, and the prospects of a safeguard duty against cheaper steel import into India.
APL Apollo Tubes was the top gainer on the index, rising nearly 3 percent to trade at Rs 1,414 per share. The stock has now strongly recovered after hitting a 52-week low of Rs 1,273 per share on February 17. It however is still significantly lower than its 52-week high of Rs 1,729 per share.
Hindustan Zinc, NMDC, Jindal Stainless Steel and Adani Enterprises shares followed, trading nearly 2 percent higher than their respective previous closing prices.
Jindal Steel shares were trading over 1 percent higher at Rs 900 apiece. Steel Authority of India (SAIL), Vedanta Limited, Tata Steel, JSW Steel, Hindalco and Ratnamani Metals & Tubes shares were also trading in the green with marginal gains.
The rise in the share prices of Adani Enterprises and Tata Steel were the top contributors in the positive uptick seen by Nifty Metal.
What Led to the Metals Rally?
A number of factors have contributed to the rally in the metal prices, with weakening dollar index being one of them. The USD index hovered near five-month low against its major peers, weighed down by President Trump's looming reciprocal tariffs. The weakness in dollar prompted Indian rupee to touch a three-week high of 86.91 against the US currency.
Indian metal exporters to US are expected to benefit from weakening US dollar. Additionally, the rally in steel stocks comes on the back of expectations of a safeguard duty on cheap Chinese imports. Tata Steel CEO and managing director TV Narendran had recently said that the industry is expecting news on safeguard duties soon. He also said President Trump's tariffs could strengthen the domestic ferrous companies' plea for protection.
Last week, President Trump had imposed a 25 percent tariff on all steel and aluminium imports, and threatened to double tariff on Canadian imports but later backed down after Canada’s move to withdraw some retaliatory tariffs.
India will also be able to take advantage of aluminium and steel tariffs imposed by the US last week, SBI Research said in its latest report.
For the steel sector, Moody's said that the proposed US tariffs will have minimal direct impact on the related companies. "Rated steel and petrochemical producers including Tata Steel, JSW Steel and PTT Global Chemical Public Company generate most of their earnings from Asia and they have little to no exports to the US," the report said.
Market participants are also expecting more stimulus measures from China to bolster consumption and cushion the economic impact of an escalating trade war with the United States.
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