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Stocks of metal companies will react to results of the state elections to be announced on Sunday, which will have the largest impact on infrastructure-related companies. A landslide win by the Bharatiya Janata Party is seen having a positive impact on the market, pulling up metal stocks along with it. Companies like Steel Authority of India, which JPMorgan highlighted in its latest report has "the biggest beta to domestic demand", will gain the most in this case as most of its steel products are consumed by the domestic market. Another factor that may affect non-ferrous stocks next week is the US Non-farm payroll data for November, which released yesterday. The data indicated an improvement in the US economy and thus a greater chance of early tapering of the programme. This affects non-ferrous stocks the most as it reduces the risk appetite of investors and thus the inflows into the metal sector. Steel is seen as a much lesser volatile commodity than aluminium, copper, lead, and nickel which are highly traded on international markets and more affected by the vagaries of international economic sentiment.
Bullish view on Tata Steel for next week and sees its important support level at 415 rupees. Outlook on the stock will remain positive as long as it sustains above this level. In the near-term, there is lack of clarity over production from the Mahan coal block for its Mahan smelter. Without captive coal block, the Mahan smelter is expected to face cost pressures, resulting in lower return ratios over FY2013-15. Positive on NMDC. NMDC has performed well operationally and will likely report +10% yoy volume growth in FY2014E. The company will report a strong 2HFY14E driven by improved pricing environment and higher volumes (55% of FY2014E).
Stocks of metal companies will react to results of the state elections to be announced on Sunday, which will have the largest impact on infrastructure-related companies. A landslide win by the Bharatiya Janata Party is seen having a positive impact on the market, pulling up metal stocks along with it. Companies like Steel Authority of India, which JPMorgan highlighted in its latest report has "the biggest beta to domestic demand", will gain the most in this case as most of its steel products are consumed by the domestic market. Another factor that may affect non-ferrous stocks next week is the US Non-farm payroll data for November, which released yesterday. The data indicated an improvement in the US economy and thus a greater chance of early tapering of the programme. This affects non-ferrous stocks the most as it reduces the risk appetite of investors and thus the inflows into the metal sector. Steel is seen as a much lesser volatile commodity than aluminium, copper, lead, and nickel which are highly traded on international markets and more affected by the vagaries of international economic sentiment.
Bullish view on Tata Steel for next week and sees its important support level at 415 rupees. Outlook on the stock will remain positive as long as it sustains above this level. In the near-term, there is lack of clarity over production from the Mahan coal block for its Mahan smelter. Without captive coal block, the Mahan smelter is expected to face cost pressures, resulting in lower return ratios over FY2013-15. Positive on NMDC. NMDC has performed well operationally and will likely report +10% yoy volume growth in FY2014E. The company will report a strong 2HFY14E driven by improved pricing environment and higher volumes (55% of FY2014E).
