#NIFTYMETAL : What lies ahead?

• For metal stocks, the tide has shifted. The metal counters are melting dramatically after a big outperformance last year, to the point where the BSE Metal index formed a Death Cross today.

• Following a dramatic 29 percent drop in two months from its 52-week high of 23,742.99, the index recorded a 52-week low of 16,901.9.
• For metal stocks, the tide has shifted. Metal counters are melting sharply after a big outperformance last year.

• Due to limits and curbs imposed by the Covid-19 issue in China, the world's largest consumer of metal, market analysts do not expect these counters to recover in the short term.

• Meanwhile, due to the government's 15% export levy on iron ore and pellets, India's iron ore prices are likely to remain decoupled from seaborne ore prices, according to experts.

• In the last two weeks, domestic steel/iron ore prices have dropped 8%/11%. The application of export duties is driving this, rather than corporations planning for a minimal impact of the event.

• Given sluggish demand and the local price premium-to-export parity, additional price declines in the coming weeks are possible.

• Most of the analysts have a sell rating on the stock and a bearish bias persists for the metal counters.