Steel’s struggles amid metals surge: What lies ahead for investors

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Read this | In 2024, metals sector poised for gradual turnaround Between 2011 and 2020, sectors like PSU Banks, Realty, Infra, CPSE, and Metals struggled to gain traction, largely ignored by investors. However, from 2021 to July 2024, these once-overlooked sectors have made a strong comeback, displaying newfound strength and resilience. Among the resurgent sectors, the metals sector stand out.

The sector, encompassing copper, nickel, steel, aluminium, lead, and zinc, plays a vital role in the global economy and trade. After years of consolidation, the Nifty Metal Index has finally broken out, signalling a significant shift in market dynamics. Copper is often seen as a barometer for the global economy.

Prices of the benchmark US COMEX Copper have surged by over 160% from pandemic lows. Historically, copper has led the way for other base metals, with its price movements often signalling broader market trends. However, the post-pandemic "new normal" has introduced anomalies, with some base metals no longer closely following copper’s lead.

The copper market has remained bullish, as illustrated by the Point & Figure (P&F) chart—a tool that eliminates noise by focusing solely on significant price movements. P&F charts, used in technical analysis, differ from traditional charts by disregarding the influence of time. Instead, they focus on substantial price changes, filtering out minor fluctuations.

In this method, 'X' represents bullish moves, while 'O' indicates bearish trends. On the weekly 3% X 3 P&F chart, copper prices have pulled back from their highs but continue to exhibit a strong bullish trend, evidenced by a Bullish Anchor Column with over 15-X. Prices remain above the D-Smart Line, suggesting that the bulls are