Nifty Metal index climbs 2% amid revival in global manufacturing activity

Nifty Metal index gains 60% in the past year

The Nifty Metal index climbed nearly 2 percent to lead sectoral indices as the top gainer on April 9, thanks to a global uptick in manufacturing activity. Both, China and the US reported notable rise in manufacturing activities, boosting confidence in metal stocks.

Last week, the US saw its manufacturing sector growing for the first time in 18 months. The ISM reported a surge in the US manufacturing Purchasing Managers' Index (PMI) to 50.3 in March, up from 47.8 in February, marking the highest reading since September 2022.

Similarly, China's manufacturing activity expanded in March for the first time since September, indicating economic stabilisation in the world's second-largest economy. The data offered some relief to policymakers even as a crisis in the property sector remains a drag on the economy and confidence.

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In March, China's Purchasing Managers' Index (PMI) climbed to 50.8 from 49.1 in February, surpassing the forecast of 49.9 in a Reuters poll. It's worth noting that China is the largest consumer of metals.

Data released on April 8 revealed that German industrial production surged by 2.1 percent in March, exceeding Reuters estimate of a 0.3 percent increase. The Federal Statistics Office credited the growth in industrial production to the robust performance of the construction industry.

Over the last year, the Nifty Metal index has surged by 60 percent, surpassing the 30 percent gain observed in the Nifty 50 index.

Also Read | Hindustan Zinc trades 4% higher on record refined metal production

Hindustan Zinc was the top gainer on the Nifty Metal index on April 9 as it traded 9 percent higher at Rs 377. Hindustan Copper was the second-highest gainer, up 8 percent at Rs 356.

Given the current momentum, companies like Steel Authority of India Ltd, Tata Steel Ltd, National Aluminium Company Ltd, and Vedanta Ltd are anticipated to see further upside of 5-10 percent, said Ajit Mishra, SVP - Technical Research at Religare Broking Ltd.

In addition to the manufacturing activity, specific developments within companies have also contributed to the gains in certain metal stocks on April 9, as per Mishra.