Barometers scale fresh highs; metal stocks edge higher

The key equity benchmarks hit fresh intraday high in mid afternoon trade. The Nifty was trading above the 15,750 mark. At 14:28 IST, the barometer index, the S&P BSE Sensex, was up 74.74 points or 0.47% to 52,690.30. The Nifty 50 index added 79.40 points or 0.51% to 15,788.80.

In the broader market, the S&P BSE Mid-Cap index rose 0.30% while the S&P BSE Small-Cap index gained 0.76%.

Buyers outnumbered the sellers. On the BSE, 1957 shares rose and 1199 shares fell. A total of 151 shares were unchanged.

Buzzing Index:

Shares of seven metal companies were buzzing in trade after ArcelorMittal upgraded its 2021 global apparent steel consumption forecast.

ArcelorMittal reported sales of $19.343 billion in 2Q 2021 as compared with sales of $10.976 billion reported in the same period last year. EBITDA surged to $5.052 billion in 2Q 2021 from $0.707 billion in 2Q 2020. EBITDA per tonne (US$/t) was at $314 in 2Q 2021 as compared with $48 in 2Q 2020.

The company has upgraded its global apparent steel consumption (ASC) forecast in 2021 vs. 2020 from +7.5% to +8.5%, from previous growth estimate of +4.5% to +5.5%.

Last week, media reports suggested that China could impose an export tax on its steel to cool domestic prices. In May, China reportedly announced the abolition of rebates to discourage exports and cool prices, but the move hasn't led to the desired impact.

China's steel exports reportedly rose 23% in June to 6.5 million tonnes (mt) from the preceding month (75% from a year ago) despite the removal of export rebates, according to the Chinese trade data.

As per reports, the export tax could raise regional steel prices due to tightened supply but will be positive for Indian steel companies.

According the media report, since early July, China has started widening its efforts to cut steel output across the country, as it aims to keep production in 2021 below that of 2020-part of its overall plans to curb carbon emissions.

However, it remains to be seen how strictly these output cuts will be implemented through 2021, as curbs will lead to steel supply shortages and skyrocketing prices in the second half of the year, a situation China has been trying to control via several measures in recent months, the reports added.

Thus, strong performance and commentary from ArcelorMittal coupled news reports about export ban and production cuts in China set ablaze a rally in metal stocks.

Hindalco Industries (up 8.41%), Tata Steel (up 6.66%), Vedanta (up 5.81%), SAIL (up 4.93%), NMDC (up 4.91%), Jindal Steel & Power (up 4.84%) and JSW Steel (up 3.76%) edged higher.

Concurrently, the Nifty Metal index surged 4.62% to 5,788.20.

Numbers to Track:

In the foreign exchange market, the partially convertible rupee rose to 74.26 compared with its previous closing of 74.3825.

MCX Gold futures for 5 August 2021 settlement added 0.87% to Rs 47,990.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.36% to 91.99.

The yield on 10-year benchmark federal paper rose to 6.194% from its previous close of 6.188%.

In the commodities market, Brent crude for September 2021 settlement rose 68 cents or 0.91% to $75.42 a barrel. The contract added 0.35% or 26 cents to settle at $74.74 in the previous trading session.

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