Metal Stocks Correct Amidst Disappointing Economic Data
Metal stocks in India experienced a correction of up to 2% on Tuesday, following sharp gains in the previous session. The Nifty Metal index dropped by half a percent amidst a bearish market sentiment. NMDC shares led losses with a decline of over 2%, while Hindustan Copper shares fell by more than 1%. This comes after metal prices corrected due to disappointing economic data from China and the US-Iran truce expiration without a longer-term peace deal.
The correction in metal stocks can be attributed to the decline in copper prices, which were impacted by concerns over availability on the London Metal Exchange. Copper inventories are at their lowest since February, contributing to the price drop. Other precious metals like gold and silver also declined in the domestic market, although they extended gains internationally.
Analysts believe that this correction presents an opportunity for investors to buy metal stocks. Sunny Agrawal from SBI Securities noted that copper, aluminium, zinc, and silver prices have risen by 6%, 4%, 8%, and 12% respectively over the last month. He advises investors to selectively participate in names like Nalco and Hindustan Zinc while adhering to stop-loss.
Technical analyst Hitesh Rathi from Angel One observed that the Nifty Metal index had been trending lower since May, with a correction of over 10% translating into a sharper decline across several metal stocks. However, he noted that the sectoral index has established a strong support zone and is turning constructive.