Metals extend rally on strong demand; Tata Steel zooms 97% in 3 months

Shares of metal companies extended their rally into Thursday, with the Nifty Metal index surging 4 per cent to hit a fresh 52-week high of 3,564 on the National Stock Exchange (NSE) on strong demand outlook. In comparison, the Nifty50 index hit a fresh record high of 14,256 today. The index was up 0.28 per cent, at 02:15 pm.

Tata Steel, Hindustan Copper, Jindal Steel and Power (JSPL) and Hindalco Industries from the Nifty Metal index were up between 5 per cent and 9 per cent. NMDC, Hindustan Zinc, Steel Authority of India (SAIL), JSW Steel and National Aluminium Company gained in the range of 2 per cent to 3 per cent on the NSE.

In 2021, steel demand in India is expected to be extremely strong on the back of government's infrastructure investments, production linked incentives, support for rural economy through infra development. Restarting of construction activities across India and recovery in the auto industry are also likely to support demand.

Among the individual stocks, Tata Steel hit three-year high of Rs 729, up 7 per cent on the NSE. The stock was trading at its highest level since January 2018. In the past three months, it rallied 97 per cent, as compared to 57 per cent surge in Nifty Metal index and 21 per cent gain in the Nifty50 index.

Last month, S&P Global Ratings had revised outlook for Tata Steel to 'stable' on the expectation that the company’s earnings would strengthen over the next 18 months and its key financial metrics would improve to levels appropriate for the current rating.

JSPL too rallied 7 per cent to Rs 305, its fresh 52-week high, on the back of heavy volumes. The trading volumes on the counter jumped 1.5 times with a combined 14 million equity shares changing hands on the NSE and BSE.

JSPL steel operations reported their highest ever monthly production volumes with 7.27 lakh tonnes during December 2020. The company’s steel sales increased by 12 per cent (Y-o-Y) to 18.8 lakh tonnes in the October- December quarter (Q3FY21).

SAIL was up 4 per cent to Rs 79.25, rallying 137 per cent in the past three months. The stock of the state-owned company hit a 52-week high of Rs 80.30 on January 5, 2021. The company’s management expects the company is determined to perform better in future and is geared up to take all necessary actions to remain a world-class domestic steel producer towards building an Atmanirbhar Bharat.

SAIL had reported a consolidated net profit of Rs 437 crore in the July-September quarter (Q2FY21) on back of strong operational performance. It had posted a net loss of Rs 286 crore in the same quarter of previous fiscal and a loss of Rs 1,226 crore in the June quarter (Q1FY21).