Indian metal shares surge as demand hopes build after China’s $220 billion stimulus plan
- Hindalco Industries was the top performer with nearly 7% gains followed by Vedanta, NALCO, Tata Steel and SAIL which rose 4%-6%.
- The Chinese government is considering raising $220 billion by selling special bonds to accelerate infrastructure funding and reviving the pandemic-hit economy.
- The funds raised are for infrastructure spending.
- Analysts say the development will boost Indian metal companies.
AdvertisementShares of metal companies surged in the last hour of trading on expectations of strong demand from China, the biggest commodity producer and consumer, after a report that the country was considering a $220- billion stimulus.
The shares of Indian metal companies shot up right after Bloomberg reported that the Chinese government was considering raising $220 billion by selling special bonds to accelerate infrastructure funding and revive the pandemic-hit economy. These sales of bonds are likely in the second half of the year.
The funds raised are to be used for accelerating the country’s infrastructure development that had taken a hit post the pandemic and the collapse of Evergrande.
The demand for metal commodities like steel from China has been muted since September 2021, when Evergrande, the second-largest real estate developer in China, crumbled under the weight of its own debt.
The Indian government’s 15% duty on steel exports have also been hurting the sector, crimping exports.
This latest stimulus plan will revive demand for metals and is seen as a much needed booster for the Indian metal companies, which had ramped up exports to the country in recent times after Chinese companies shut down or underwent lockdowns.
On Thursday, Aditya Birla Group firm Hindalco Industries, one of the biggest aluminium and copper manufacturers, was the top performer on the Nifty 50, ending almost 7 percent higher at ₹364.40 on Thursday. Steel makers Tata Steel and Jindal Steel ended up 5.6 percent and 5.4 percent respectively.
The Nifty Metal index closed nearly 4% higher today.
|Top performers in metal sector||Closing gains on July 7|
Analysts believe the development in China is a much needed push for domestic metal companies.
“Since there is news that China is coming out with a large stimulus of $220 billion, which could put a lot of strength in metals and commodities, which are trading at abysmal levels. Currently, there are many metals stocks which are trading below their value. China has acted like a real icing on the cake. We believe metals are very big value pitches, which need a right recipe for movement and that has just come,” Sanjiv Bhasin, director at IIFL Securities, told Business Insider India.
SEE ALSO: Indian taxes on cottage cheese will hit the cottage industry and dairy lovers alike
Gone with the windfall tax: ONGC loses a fifth of its market value
Popular on BI
- Life and times of Rakesh Jhunjhunwala — the man behind the trader
- DOJ officials were alarmed by surveillance footage of the Mar-a-Lago room where classified info was being stored, report says
- Meet Judge Bruce Reinhart the magistrate who approved the FBI search warrant into Trump's Mar-a-Lago home receiving threats from MAGA supporters
- Mutual funds tank up on financial services and retail stocks
- Smoking, alcohol and obesity caused 4.4 mn cancer deaths in 2019: Lancet
- Nifty Bank index up over 11% so far this year, BoB outperforms index
- There is a breather from record high inflation, but still above tolerance band: RBI
- Zomato’s quick commerce app Blinkit to deliver printouts at your doorsteps in 11 Minutes