Metal shares gain; Hindalco, Vedanta, Hindustan Copper hit 52-week high

Nifty Metal index was up 1% at 2,623, as compared to 0.15% fall in the Nifty 50 index at 01:47 pm.

Metal shares are continued at their upward movement with the Nifty Metal index up 1%, hitting 18-month high on the National Stock Exchange (NSE) in an otherwise subdued market.

Hindustan Copper (up 11% at Rs 71.85), Vedanta (4% at Rs 180), Hindalco Industries (up 3% at Rs 159), JSW Steel (1% at Rs 1,780) and NMDC (1% at Rs 108) are trading at their respective 52-week highs.

At 01:47 pm, Nifty Metal index was up 1% at 2,623, as compared to 0.15% fall in the Nifty 50 index. The metal index hit an intra-day high of 2,626, its highest level since February 28, 2015.

Motilal Oswal Securities has increased target price of Hindalco to Rs 216 as the brokerage firm expect the company to generate Rs 3,500 crore-Rs 4,900 crore of annual free cash flow, leading to corresponding reduction in net debt.

“We believe Hindalco will get re-rated, with better visibility of cost structure of primary smelting, improving return on equity (RoE), deleveraging, and clear focus on consolidation. After a long investment cycle, Hindalco has now created three new greenfield sites (Aditya, Mahan and Utkal), which can be leveraged for low cost brownfield expansions,” analysts said in a report dated August 18, 2016.

Post April-June 2016 quarter results, in past five trading sessions, the stock outperformed the market by surging 12% from Rs 142 on August 11, as compared to less than 1% rise in the benchmark index.

Meanwhile, according to Moody’s Investors Service, Indian companies are expected to do well as demand for steel is expected to rise.

Moody’s says Indian industry is expected to do well because of protection measures announced by the Union government. Jiming Zou, Moody's vice-president and senior analyst said, the profitability of Indian steel companies will be better than those of their regional peers “owing to rising domestic demand, minimum import prices and anti-dumping duties.”

Mahamaya Steel Industries (up 20% at Rs 367) and Hind Aluminium Industries (15% at Rs 101) are among non-index stocks rallied more than 10% each.