Metal stocks shine on Chinese manufacturing PMI data

Moneycontrol Bureau

Metal stocks were rallied today as the BSE Metal Index gained more than 2 percent after the Chinese August HSBC flash manufacturing Purchasing Manager Index (PMI) data hit a four-month high of 50.1 as against 47.7 in July on rebound in new orders. China is the world's largest consumer of copper and aluminum. Tata Steel shares rallied more than 4 percent while Jindal Steel, SAIL, Sterlite Industries and NMDC were up 1.5-2.5 percent. Nomura is overweight on metals space. The brokerage house feels that Indian metal stocks are attractive. China economic indicators continue to strengthen and global metal prices have bottomed out in June, the brokerage house report said. According to Nomura, the rupee depreciation will benefit Indian companies significantly and bottoming out of global metal prices will be helpful. Nomura added Tata Steel, Sterlite Industries and SAIL to its long only basket while it maintained a buy on Hindalco Industries with a target price of Rs 133. The brokerage house also maintained buy Tata Steel and SAIL with target prices of Rs 443 and Rs 103, respectively. Stock Specific News Sesa Goa gained 2.6 percent as the stock will be included in the BSE benchmark Sensex with effect from August 27. Sterlite Industries (up 2 percent) will be merged with Sesa Goa next week. Hindustan Zinc soared 6 percent; the government is likely to dilute its stake in the company soon. Sources say finance ministry asked mines ministry to expedite cabinet note on stake sale and proposed auction route for stake sale. Sterlite Industries holds 64.92 percent stake in the company while government has 29.54 percent stake as of June 2013. Hindalco Industries rose 1.6 percent on a media report that promoter Kumar Mangalam Birla will raise stake in the company to 37 percent and will convert 15 crore preferential warrants into equity shares to raise holding by 5 percent. JSW Steel rallied 3 percent as the company indicated it will hike prices by 4-6 percent from September 1, 2013.