Metal stocks rally on strong China Data, US rate cut hopes
Shares of metal companies surged Monday, leading gains in a session where benchmark indices hit lifetime highs. The Nifty Metal index also surged to a record, ending with near 4% gains on positive manufacturing data from China amid brightening prospects of a June start to the US rate easing cycle.
Shares of companies in this space ended 4-11% higher, with state-owned companies clocking in relatively higher gains. This outperformance was driven by them being relatively under-owned, said experts.
“The market perception towards PSU companies has changed, and they are believed to be cheaper. This along with the under-ownership is leading to a broad-based recovery,” said Aditya Welekar, analyst, Axis Securities.
Manufacturing activity in China grew at its fastest pace in 13 months in March, while an official factory survey showed that the manufacturing activity grew for the first time in six months.
This triggered a rally in shares of Indian metal producers, which were also supported by strength in the broader market ahead of the Reserve Bank of In dia’s policy meeting later this week, and earnings for the March quarter over the next few weeks.
“The structural concerns around China with regards to their property sector remains, and this is reflecting in the steel demand in “their” country, which is not picking up,” Welekar of Axis Securities said.
China is the world’s largest producer and consumer of metals, and an ailing property market in the country has been weighing on the prices of metals globally as China has
