Nifty Metal: China's economic trajectory is yet again sending shockwaves across Dalal Street and metal stocks seem to bear the brunt of it. On Friday, the broader sectoral index, Nifty Metas tumbled more than 2 per cent as uncertainty over China's stimulus package kept investor sentiment in the cautious zone.
Major Steel giants like Tata Steel, JSW Steel, NMDC (National Mineral Development Corporation) and SAIL (Steel Authority of India Ltd) tanked by nearly 5 per cent on Friday.
At 11:50, shares of JSW Steel, the domestic steel producer with the highest market cap, were trading at Rs 979.85 price level, down by nearly 2.6 per cent on the National Stock Exchange. The public sector steel manufacturer, SAIL witnessed an even stronger pulldown as the shares of the company tumbled by 5 per cent on both the bourses.
During China's annual economic work conference, the dragon nation did affirm its policy shift towards a more "moderately loose" monetary policy, but the details around the stimulus were missing.
The country even pledged to increase its budget deficit and maintain policies for more stabilised economic growth as tensions continue to loom over Trump's return to the White House. And if there is any nation that will face the hardest pressure from Trump's return, it's undoubtedly China.
Domestic Steel Sector Under Growing Pressure
As demand levels continue to falter, analysts are once again raising caution banners for the steel industry. Plus, the pricing levels of the commodity are already creating a problem for major steel giants.
"We maintain a cautious outlook on the short-term prospects of the domestic steel industry due to below-than-expected demand recovery post the festival season, subdued steel prices, limited exports opportunities and lackluster response to China’s stimulus package," Elara Capital stated in a report.
Global steel prices are facing pressure due to China's high steel production and weak domestic demand, resulting in increased exports from the country.
"We see that the global steel prices will continue to remain under-pressure, as both the Chinese production and exports remain strong and are expected to do so thereby translating into subdued steel prices during the quarter which would remain as a cause of concern for the primary steel producers," Yes Securities stated in a November report.
