Metal stocks shine amidst gloom on BSE, end 2.8% higher

Metal stocks shone amidst the gloom in the broader market today, with the sectoral index ending 2.80 per cent higher on the BSE, led by Sterlite Industries and Hindalco.

The metal index emerged as the third-best performer among the 13 sectoral indices on the BSE today, ending 463.34 points -- or 2.80 per cent -- higher at 16,990.74 points. All the 13 shares constituting the BSE-Metal index ended in the positive zone.

The surge in metal stocks was powered by expectations of strong earning results for the third quarter (October-December) of FY2010-11 and a firming trend in base metals overseas, according to market analysts.

A hike in steel prices by leading manufacturers also supported the rally, they said.

The major contributers to the rise of the sectoral index were Sterlite Industries, Sesa Goa and Hindalco, which recorded significant gains during today's trade.

Copper producer Sterlite Industries was the biggest gainer in the metals pack, closing 6.49 per cent up at Rs 183.05 after touching an intra-day high of Rs 184 on the BSE, while Hindalco ended 2.97 per cent higher at Rs 237.35.

Market analysts said the unabated rise in copper prices on the London Metal Exchange follows Japan's move to join China in buying euro-area bonds, easing concerns that the European debt crisis may derail the recovery of the global economy.

A firm opening on European bourses and expectations of strong quarterly earnings and rising steel prices also fuelled buying interest in metal stocks, they said.

"Bargain buying by funds and speculators also helped metal stocks stage a comeback," said Deepak Pahwa, a Delhi-based stockbroker.

Stocks of Tata Steel ended 0.26 per cent higher at Rs 649.30 after touching an intra-day high of Rs 658.90, while Jindal Steel and Power's scrip ended 2.13 per cent higher at Rs 691.70.

Other gainers in the metal pack include Hindustan Zinc, which jumped by 2.45 per cent to Rs 1,413.55, while Jindal Saw rose by 3.32 per cent to Rs 216.60, JSW Steel by 5.41 per cent to Rs 994.55 and Nalco by 1.31 per cent to Rs 378.45.

Globally, copper prices rose by 1.2 per cent to $ 9,626 per tonne today, while nickel advanced by 2 per cent to $25,195 per tonne. In addition, lead prices increased by 1.3 per cent to $2,630 per tonne.

Meanwhile, the BSE benchmark Sensex rose by 337.76 points, or 1.76 per cent, to 19,534.10 today after remaining in the negative zone for six straight sessions.