Why are metal stocks rallying: Explained!
Metal stocks have been on a roll lately. The Nifty Metal index has been up significantly, with gains of over 50%, in the last one year. ETMarkets spoke to Sonam Srivastava, Founder & CEO of Wright Research, to understand the factors behind the rally and more. Edited excerpts:
1. The Nifty Metal index has been up significantly with gains of 8.4% in the last 30 days. It has gained about 57.8% in the last year. What are the factors behind the rally in metal stocks?
The rally in metal stocks can be attributed to several factors. First, there's a significant surge in demand coming from China, a major player in the global metal market. Additionally, geopolitical concerns in regions like Southeast Asia and Russia have restrained the supply of certain metals, further driving up prices. In India, growth in infrastructure and manufacturing sectors is boosting demand. Moreover, the shift towards electric vehicles (EVs) is increasing the demand for both ferrous and non-ferrous metals.
2. Do you think the rally will sustain in the metal stocks?
While the rally appears strong, it's important to consider its sustainability, especially given the cyclical nature of the metal industry. The current strong demand, particularly from China, may continue in the first half of the year but could potentially slow down around June. Speculation surrounds the long-term sustainability of the rally.
3. What are the risks associated with the sector considering its cyclical nature?
Risks in the metal sector include a potential slowdown
