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Metals stocks slip further as China steps in to tackle shortages, high prices; brokerages retain 'buy' on Tata Steel

The metal index was down for the fourth day in a row as it slipped more than half a percent, dragged by Hindustan Zinc, NALCO, Hindalco Industries, Tata Steel, Jindal Steel & Power and others.

June 17, 2021 / 10:27 AM IST
Nava Bharat Ventures | Nava Bharat Ventures has acquired 13,66,970 equity shares of itself through open market transaction at a price of Rs 69.98 per share on March 18, the bulk deals data available on the NSE showed. The stake buy represented a 0.77 percent of total paid up equity capital of the company. This news came in after market hours on March 18. Earlier this month, diversified company Nava Bharat Ventures already bought 41,52,847 equity shares, representing 2.35 percent of total paid up equity, through three bulk deals. The stock closed 1.37 percent higher at Rs 70.10 on March 18. It hit a 52-week high of Rs 76.25 on February 26, 2021, and a low of Rs 32.40 on March 24, 2020. The market-cap of the company stands at Rs 1,235.28 crore. In terms of technicals, the current rating by Moneycontrol on the stock is very Bullish. The important support levels for the stock are placed at Rs 67.63-66.02, while resistance is placed at Rs 72.23-75.22, data from Moneycontrol.com showed.

Nava Bharat Ventures | Nava Bharat Ventures has acquired 13,66,970 equity shares of itself through open market transaction at a price of Rs 69.98 per share on March 18, the bulk deals data available on the NSE showed. The stake buy represented a 0.77 percent of total paid up equity capital of the company. This news came in after market hours on March 18. Earlier this month, diversified company Nava Bharat Ventures already bought 41,52,847 equity shares, representing 2.35 percent of total paid up equity, through three bulk deals. The stock closed 1.37 percent higher at Rs 70.10 on March 18. It hit a 52-week high of Rs 76.25 on February 26, 2021, and a low of Rs 32.40 on March 24, 2020. The market-cap of the company stands at Rs 1,235.28 crore. In terms of technicals, the current rating by Moneycontrol on the stock is very Bullish. The important support levels for the stock are placed at Rs 67.63-66.02, while resistance is placed at Rs 72.23-75.22, data from Moneycontrol.com showed.

Metals continued to be under pressure on June 17 as well, with the metal index shedding more than 4 percent in as many days as China promised to release reserves to ease shortfall fears.

"Industrial metals are in the spotlight after Chinese authorities made a pledge to release government reserves to tackle concerns over shortages and high prices," a Financial Times report said.

The National Food and Strategic Reserves Administration said on June 16 that it would release batches of metals, including copper, aluminium and zinc, making them available to manufacturers.

The metal index slipped for the fourth straight days, down over half a percent dragged by Hindustan Zinc that slipped 2 percent followed by NALCO, Hindalco Industries, Tata Steel, Jindal Steel & Power, Coal India and NMDC.

Global brokerage firm Jefferies has a buy call on Tata Steel with the target at Rs 1,500 per share. The FY21 annual report shows a rising focus on sustainability and also sets out specific targets for 2025/2030, a CNBC-TV18 reported the brokerage as saying.

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"India capacity expansion is a key strategic focus with the company working on separating the UK and Netherlands businesses," it said.

CLSA also has a "buy" call on the stock with the target at Rs 1,362 a share. Europe should be self-sufficient in cashflows in the near term, however, carbon costs were a medium-term risk. "With a stronger balance sheet and improving returns, we reiterate buy on the stock," it said.

Dhananjay Sinha, MD and Head Strategist at JM Financial in an interview to CNBC-TV18 said he was cautious on the metal sector. “We are cautious on the metal space from the portfolio standpoint,” he said.

“We are looking at a correction in the commodity price hence the commodity stocks, which have run up by four-seven times over the last twelve months can start correcting,” he added.

Credit Suisse, in its research note, downgraded the sector due to many risks ahead. It downgraded the sector to underweight and said the rise in global steel price may have run its course.

The investment bank highlighted that the impact of supply chain shock, which drove steel prices to record highs was easing. China was entering a weak demand season at a time when production continued to be very strong, it said.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.

The views and investment tips expressed by experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandip Das
first published: Jun 17, 2021 10:27 am

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