‘Rally in aluminium co shares may take a pause’
base metal are unlikely to gain much from current levels, said experts. Shares of Hindalco, Vedanta and National Aluminium Co ended higher on Friday even as the Nifty Metal index, and benchmarks Nifty 50 and Sensex ended in the red.
“Those holding the shares of these companies can continue to do so, but I would not suggest buying these shares at the current levels, except for Vedanta, where investors need to maintain a strict stop loss,” said Aditya Welekar, analyst at Axis Securities. “We are at a level where a large part of the rally has already happened,” he said.
After gaining 16-25% over the last month, shares of both Hindalco Industries and National Aluminium Co tested their lifetime highs on Friday. Shares of Vedanta, the country’s largest producer of the metal, have jumped nearly 48% in a month and are at their highest level in two years.
Prices of aluminium on the LME, meanwhile, have rallied more than 11% in a month amid news of manufacturing activity picking up in China and US, sanctions on Russia for the metal and some supply disruption for bauxite in Guinea. Bauxite is the raw material used in the production of aluminium.
“The probability of (aluminium) prices falling from the current levels is higher than the probability of even sustaining at the current levels. What is see is prices normalizing in the range of $2,400-$2,500/tonne,” Welekar said. Aluminium prices were at $2,591 a tonne on the LME.
The demand for aluminium in the March quarter has been better than expectations, mainly led by China,
