Moneycontrol Bureau
Brokerage house Nomura is telling its clients to book profits in metal shares as it feels improved fundamentals may be fully reflecting in current stock prices.
Here are four reasons why Nomura feels it is time to take money off the table:
* Indian metal stocks have significantly outperformed both the domestic market as well as their global counterparts over this period.
* Earnings upgrades since September, and the benefit of rupee depreciation to product realizations, which was not being reflected in consensus numbers three months ago, have been priced in.
* Third, following this outperformance, the wedge between stock price levels and rupee-denominated metal prices has now closed for stocks in the sector.
* There exists a downward bias to global commodity prices in the near-to-medium-term, in our view, on account of two key overhangs: a) downside surprise on growth in China and b) Fed taper
Nomura has dropped Hindalco, Sesa Sterlite and SAIL from its long-only basket, but retained Tata Steel.
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