Stock market: Nifty Metal index logs biggest jump in nine months

Metal stocks rallied on Wednesday on optimism that China’s move to cut steel output will boost demand and profitability.

 

Sentiment also got a fillip after China announced more fiscal stimulus to shore up economic growth to 5 per cent and soften the impact of an escalating trade war with the United States.

 

The Nifty Metal index rose 4.04 per cent — most since June 5 — to end at 8,685, with all of its 15 components ending with gains.

 

The top gainers were Hindustan Copper and Welspun Corp, which surged 7 per cent each, followed by National Aluminium Company that saw 6 per cent rise.

 

 

In an attempt to ease a massive glut and restore profitability at the mills, Chinese authorities will promote industry restructuring to reduce production, the nation’s economic planning agency said at the National People’s Congress in Beijing on Wednesday.

 

There were no specifics given on the volume of cuts in the sector. However, the market had speculated that as much as 50 million tonnes of output a year could be cut.

 

Premier Li Qiang, during a speech at the opening of the annual meeting of China's parliament, warned that “changes unseen in a century are unfolding across the world at a faster pace.”

 

He set a 5 per cent gross domestic product (GDP) growth target for 2025 and a larger budget deficit plan of around 4 per cent.

 

China, the world’s second-largest economy, consumes almost half of the global metals supply. As a result, its economic outlook has a huge bearing on metal prices.

 

Subdued growth expectation for China and poor infrastructure demand had weighed on steel, iron ore and other base metal prices lately. 

 

Despite the recent tariff threats by US President Donald Trump, the Nifty Metal index has outperformed the Nifty over the last one year. Among the standout performers over the last one year have been Vedanta and Hindustan Zinc.