Metal shares rally on upbeat China PMI data

The BSE Metal index up 6% set to poise its biggest single day rally in past two years.

Shares of metal companies set to post its biggest single day rally in past two years on hopes revival of Chinese economy.
 

A closely watched indicator of Chinese manufacturing turned positive for the first time in four months in August, HSBC said, in a sign of renewed strength in the world's second-largest economy. China is the world's largest consumer of copper and aluminum.

Tata Steel, Hindalco Industries, Jindal Steel and Power, Sterlite Industries, NMDC, Sesa Goa, JSW Steel and SAIL are up in between 2-5% on the Bombay Stock Exchange (BSE).

The BSE Metal index, the largest gainer among sectoral indices, was up 6% as compared to 1.3% rise in benchmark index S&P BSE Sensex at 1356 hours. The metal index set to poise its biggest single day rally in past two years. The index had gained 6.34% on October 28, 2011.

The Flash HSBC Purchasing Managers' Index (PMI) rose to 50.1 from July's final reading of 47.7, which was the weakest in 11 months, though it barely passed the watershed 50 line which demarcates expansion of activities from contraction, the Reuters report suggest.

The PMI tracks activity at China's factories and workshops and is a closely watched gauge of the health of the economy. A reading below 50 indicates contraction, while anything above signals expansion. The result was the highest in four months and suggested China's economy was stabilising, HSBC said.

Among the individual stocks, Tata Steel has soared nearly 9% to Rs 270, followed by Sesa Goa and Sterlite Industries are up 8% each at Rs 149 and Rs 85 respectively.

Hindustan Zinc was up 7.5% at Rs 116, while JSW Steel, Jindal Steel and Power, SAIL and Hindalco Industries are up 5-6% on BSE.