Metal Stocks Outlook for the week – 10 to 14.04.2017
Metal Stocks Outlook for the week – 10 to 14.04.2017
( www.rupeedesk.in )
Stocks of metal and mining companies are likely to react to stock-specific triggers in the holiday-truncated week ahead, even as it follows the broader market's trend due to lack of triggers. On Friday, the market will be shut for Good Friday. Shares of most metal companies, especially steel, gained this week on the back of robust production data and reports of price hike of flat rolled products. Apart from this, comments by Steel Minister Birender Singh, that a proposal has been floated to use locallyproduced steel in government projects, also aided gains in shares of steel companies. The minister also said the National Steel Policy is likely to be finalised soon, and that the ministry is in talks with other ministries to raise the consumption of steel, which will keep these companies in focus in the near term. Technical analysts believe that the larger trend for steel companies' stocks is positive. Tata Steel's stock is likely to see strong upward momentum after 509-rupee level, while Jindal Steel & Power's shares are expected to rise up to 142-rupee level in the coming week. However, fundamental analysts are not too upbeat on the sector, as they believe that valuations are stretched and that the price hikes taken by these companies may not sustain given the low demand environment. The uptrend in coking coal and iron ore costs, which is raw material for these companies, is also a concern as the market may not be ready for another round of price hikes, which is likely to hit margins of these producers, and also mar their Jan-Mar earnings. Average steel price hike of 1,500-2,500 rupees taken during the quarter will not be enough to offset this higher cost (coking coal) profile despite higher volumes, resulting in sequential decline in EBITDA (earnings before interest, tax, depreciation and amortization) for most steel plays. Apart from steel, stocks of aluminium producers will also be in focus on expectation of protective measures for local producers. Reports suggest that the government may either consider a minimum import price or anti-dumping duty for aluminium.
Source : Cogencis Information Services Ltd.
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Metal Stocks Outlook for the week – 10 to 14.04.2017
( www.rupeedesk.in )
Stocks of metal and mining companies are likely to react to stock-specific triggers in the holiday-truncated week ahead, even as it follows the broader market's trend due to lack of triggers. On Friday, the market will be shut for Good Friday. Shares of most metal companies, especially steel, gained this week on the back of robust production data and reports of price hike of flat rolled products. Apart from this, comments by Steel Minister Birender Singh, that a proposal has been floated to use locallyproduced steel in government projects, also aided gains in shares of steel companies. The minister also said the National Steel Policy is likely to be finalised soon, and that the ministry is in talks with other ministries to raise the consumption of steel, which will keep these companies in focus in the near term. Technical analysts believe that the larger trend for steel companies' stocks is positive. Tata Steel's stock is likely to see strong upward momentum after 509-rupee level, while Jindal Steel & Power's shares are expected to rise up to 142-rupee level in the coming week. However, fundamental analysts are not too upbeat on the sector, as they believe that valuations are stretched and that the price hikes taken by these companies may not sustain given the low demand environment. The uptrend in coking coal and iron ore costs, which is raw material for these companies, is also a concern as the market may not be ready for another round of price hikes, which is likely to hit margins of these producers, and also mar their Jan-Mar earnings. Average steel price hike of 1,500-2,500 rupees taken during the quarter will not be enough to offset this higher cost (coking coal) profile despite higher volumes, resulting in sequential decline in EBITDA (earnings before interest, tax, depreciation and amortization) for most steel plays. Apart from steel, stocks of aluminium producers will also be in focus on expectation of protective measures for local producers. Reports suggest that the government may either consider a minimum import price or anti-dumping duty for aluminium.
Source : Cogencis Information Services Ltd.
