The Hindu Business Line : Metal stocks firm up on Fed package

Mumbai, March 20 Metal stocks in the Bombay Stock Exchange bucked the all round bearish trend on expectations of an early revival in the global economy after the board of United States Federal Reserve cleared the Government proposal to buyback $1.15 trillion of assets.

The BSE Metal index on Friday gained 83 points to touch 5260 even as the bellwether Sensex fell 35 points to 8966.

Winners

Among the major gainers, Hindalco was up 6 per cent at Rs 48, Madras Aluminium gained 5 per cent at Rs 108, Hindustan Copper rose 4 per cent at Rs 99, SAIL went up 3 per cent at Rs 89.

Tata Steel, JSW Steel and Hindustan Zinc gained 2 per cent each to Rs 176, Rs 187 and Rs 415, respectively.

The sharp rise in base metal prices over the last few weeks in London and China also supported metal stocks rally.

Copper rose above $4,000 a tonne for the first time since November in London, gaining with other metals as the US Fed plan to buy assets pulled the dollar lower and kicked off speculation about an economic rebound.

China buy

In another indication of an economic revival, China’s commodity buyer, State Reserves Bureau, purchased 3 lakh tonnes of copper and is expected to buy another 9 lakh tonnes for the rest of the year.

Aluminium for three-month delivery on Friday gained 6.2 per cent to $1,465 a tonne, the day’s peak and the highest intra-day price since February 9.

LME-monitored stockpiles of the lightweight metal climbed to a record 3.45 million tonnes and have more than tripled in the past year.

“Though the fundamentals are still weak, global developments have pushed up trading interest in metal stocks,” said Mr Sanjay Jain, Metal Analyst, Motilal Oswal Securities.

On the weakening of dollar against rupee in the last two day, Mr Jain said it was a short-term phenomenon. One has to look at the long-term prospect of rupee against dollar to gauge its impact of exports.

On a cautious note, analysts feel that the uncertainty on the demand side for metals still remains as there is not much demand coming in from other countries, except for China. However, there could be more buying in metals during the second quarter of the calendar year.

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