Rollover of positions to the January derivative series and a reversal in the dollar index are aiding the up move in the stocks in the sector.
In four sessions, the Nifty Metal index has gained nearly 6% and hit a lifetime high of 7863.75 points.
Among base metals, Hindalco Industries rose more than 3% and scaled a 52-week high of Rs 603. National Aluminium Co rose over 1% to Rs 116.85.
Steelmakers across the board gained, with Tata Steel, Steel Authority of India, and JSW Steel rising 1-2%. JSW Steel shares also hit a lifetime high of Rs 636.
The metal sector has been among the top five performers in this year. The index barometer has gained more than 16% on a year-to-date basis.
Stocks like Hindustan Copper, Welspun Corp and Jindal Stainless have given multibagger returns of up to 132% this year. Tata Steel, JSPL, Hindalco, SAIL, NALCO, NMDC, and Ratnamani Metals have rallied 21-73%.Metals as a sector has been significantly underperforming and witnessed continued outflows since 2022 amid volatility in growth in China, the world’s largest producer and consumer of metals.
Most market experts see the metal pack attracting fund inflows next year with an easing interest rate scenario.
“With expectations of rate cut, we expect flows to be back in the metal space. The underperformance so far seen by the sector may turn into outperformance in the next year,” ICICIdirect said.
Brokerage SMC Global has picked Hindalco Industries as its top pick for 2024.
Hindalco Industries has maintained a strong balance sheet and robust cash flows with a consolidated net debt-to-EBITDA ratio below 2 times. Moreover, domestic demand is strong, especially from pent-up demand from auto (especially EV space), B&C, aerospace and beverage can.
Given the strong growth prospects, the stock is expected to test Rs 690 over the next 8-10 months.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)