Shares of Indian metal companies Tata Steel, Vedanta, and Hindalco surged up to 3% on September 26, 2024, following China’s economic stimulus measures. The moves in China’s monetary policy, including interest rate cuts and other measures, are expected to boost global commodity demand, providing a significant opportunity for Indian metal stocks.
Key Highlights:
- China’s Rate Cuts:
- Reserve Requirement Ratio (RRR) lowered by 50 basis points to increase liquidity.
- 7-day Reverse Repo Rate cut from 1.7% to 1.5%, reducing borrowing costs.
- Impact on Indian Metals Sector:
- CLSA expects a demand-driven upcycle for Indian metal stocks due to China’s stimulus.
- Vedanta: Projected upside of 24%.
- Tata Steel: Expected gain of 19%.
- Hindalco: Potential 16% upside.
CLSA suggests that while aluminum stocks are preferred for long-term growth, ferrous stocks are also likely to benefit from rising demand in China. With China’s substantial influence on global metal consumption, these measures could enhance revenue and margins for Indian metal producers.
As of 9:42 am, Tata Steel shares were trading 1.26% higher at ₹167.69, Hindalco shares 2.50% higher at ₹753.00, and Vedanta shares 1.81% higher at ₹510.85 on the NSE.
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