Metal prices have risen sharply due to the Russia and Ukraine crisis. The supply chain has also been affected due to the ban on Russia.
Metal Sector Stocks: Nifty Metal Index has recorded a strong breakout above the Consolidation Range (6312-5174) of the last 5 months. The stock has formed a high base around the 100 day EMA, highlighting a strong price structure. Brokerage house ICICI Securities says that the Nifty Metal Index can continue its better performance and further reach the level of 6750. The brokerage house says that due to the Russia and Ukraine crisis, there has been a strong increase in metal prices. The supply chain has also been affected due to the ban on Russia. In such a situation, the metal sector is expected to remain bullish going forward.
Rally in metal prices
The brokerage house says that due to the Russia-Ukraine crisis, there has been a rally in global steel prices. During YTD CY22 (January 1-March 21, 2022), the domestic HRC price has increased by 16 per cent to 73500/tonne and the domestic CRC price has increased by 14 per cent to 79500/tonne. There is concern about supply due to the prevailing geopolitical tension, while rising input costs are likely to propel steel prices further.
Russia and Ukraine are both major exporters of steel.
Russia’s crude steel production in the year 2021 was 76 million tonnes (MT), while Russian steel exports were 30 MT. Similarly, in the year 2021, Ukrainian crude steel production was 21 million tonnes (MT) while Ukrainian steel exports were 15 MT. Therefore, during CY21, both Russia and Ukraine combined accounted for 45 MT of global steel exports. At present, due to geo-political tension, there are supply concerns from these two countries, so Indian steel companies have an opportunity to increase their exports.
Tata Steel
The brokerage house has advised to enter the range of Rs 1285-1315 in the stock of Tata Steel. A target of Rs 1460 has been given for the stock in 3 months. It can give 12 percent return from the current price. The market cap of the company is Rs 159586 crore. The breakout has come after 6 months of consolidation in the stock. There is an upside movement from here. It is the top global steel company with a production capacity of 34 million tonnes per annum.
Vardhman Special Steel
The brokerage house has advised Vardhman Special Steel ie VSSL to enter the range of Rs 250-260 in the stock. A target of Rs 292 has been given for the stock in 3 months. It can give 14% return from the current price. The market cap of the company is Rs 1043 crore. The company’s stock has made a higher base beyond the 52-week EMA. Risk reward ratio is favourable. It is one of the leading steel producers in India. The company is also offering specialized products.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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