Metal Stocks Outlook
for the week – 27.06.2016 to 01.07.2016, Volatile next week; JSW Steel,
Hindalco seen up
Stocks of major metal and mining companies are seen volatile
next week after the UK voted to leave
the European Union. Nifty metal index yesterday ended at
2,086.50 rupees on the National Stock
Exchange, down 3.8%, while most metal stocks plunged 1-7%.
Prices of industrial metals such as
iron ore, copper and aluminium fell sharply yesterday on
risk aversion as economic uncertainty
dented demand outlook for commodities, along with currency
fluctuations. While the major impact of
UK's decision to leave the EU was absorbed yesterday, Indian
equities markets could still continue to
be in a correction mode over the next couple of weeks. Metal
stocks may witness a slump for a day
or two in the upcoming week. However, they may trade
positive for the rest of the week.
The initial downward correction would be there as it is
difficult to comprehend how and when the
currency would stabilise. He attributed the anticipated
correction to the rise in commodity prices such
as crude oil, coffee, metals, globally. JSW Steel, Hindalco
Industries and Vedanta are the top picks
for the sector and are likely to witness a rally. Stocks of
Tata Steel would be eyed as the steelmaker
has substantial exposure to Europe, with 30% of Tata Steel
UK's products sold in Europe. Britain's
exit from the European Union looks negative (for the
company) initially...difficult to understand how
currency will be settled. Brexit was just another trigger
for the downgrade. No major impact would
be seen on Hindalco since the company does not have any direct
exposure to the UK.
