Metal stocks see big gains on US, China recovery prospects
Positive commentary and target price hikes from CLSA and Jefferies also buoyed the shares, helping the Nifty Metal index surpass the 9,000 mark to hit a lifetime high. The index ended at 8,999.60, up 1% over the previous trading session. Benchmark indices ended half a per cent higher each.
Mumbai: Stocks of metal companies ended Wednesday with sharp gains as continued optimism of a recovery in the world's two largest economies - the US and China - underpinned gains, with the strength in the broader market adding support.Positive commentary and target price hikes from CLSA and Jefferies also buoyed the shares, helping the index surpass the 9,000 mark to hit a lifetime high. The index ended at 8,999.60, up 1% over the previous trading session. Benchmark indices ended half a per cent higher each.
CLSA upgraded to a 'buy' from 'underperform' earlier, raising its target price for the shares by 50% to ₹390. "... we believe it is well-placed to benefit from the commodity upcycle given its diversified exposure," the brokerage said.
Shares of Vedanta jumped to their highest level in their highest level in nearly two years with intraday gains the highest in 18 months.
Shares of NMDC, , , , and ended 1-8% higher on the NSE. Data from both the US and China for March showed signs of a revival in manufacturing, which has triggered sharp gains in most shares in the metals space in the last few sessions.
Jefferies has also raised the target price for shares of , , and Hindalco while retaining its rating for the stocks.
Experts, though, do not see this rally sustaining as the underlying demand is yet to pick up, while the real estate sector in China has not yet seen a sustainable recovery. The real estate sector in China accounts for almost a third of the country's GDP and is one of the largest consumers of metals. Any sustainable rally in the metals space, therefore, has to be backed to traction in the Chinese real estate market.
Source: Stocks-Markets-Economic Times
