The shares of metal companies dropped in trade on July 16 as US dollar gained strength on the back of higher inflation in US. The fall in share prices pushed the Nifty Metal index into the red, down as the top sectoral loser in the trading session.
The Indian rupee opened 18 paise lower following the dollar strength, as a stronger dollar makes commodities costlier for holders of other currencies.
The rise in the US currency came after US inflation data for the month of June hinted at pressures from President Trump's harsh tariffs, which in turn led to lower bets for Federal Reserve's rate cut.
US consumer prices rose 0.3 percent in June, implying an annual rate of 3.5 percent. This is higher than the 0.1 percent increase reported in May. Morgan Stanley in its daily market update said US inflation is beginning to show ‘signs of tariff pressure’. Markets have noted tariff inflation effects and appear to ‘seemingly brace for the Fed to remain on hold for longer’, it added.
"The increased uncertainty about tariffs and the extension of the trade talks deadline to 1 August suggest the Fed will need a few more months of data before cutting the policy rate," ANZ Bank said. Lower expectations of a rate cut may have also impacted the metal stocks.
Jindal Stainless Limited (JSL) shares were the top loser on the index, falling nearly 2 percent to trade at Rs 677 apiece. Steel Authority of India (SAIL) and National Aluminium Company (NALCO) shares were down over 1 percent. Heavyweights Tata Steel and JSW Steel shares fell nearly 1 percent each.
Hindalco Industries, APL Apollo Tubes and Vedanta shares were down over 0.5 percent each, while Hindustan Zinc, Jindal Steel & Power and Hindustan Copper shares were trading in the red with marginal losses.
Bucking the trend, NMDC shares gained 1 percent. Adani Enterprises and Welspun Corp shares were also trading in the green.
(With inputs from Reuters)
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