Metal stocks gain up to 4% after Chinas central bank cuts interest rate
On Tuesday, the Peoples Bank of China cut its policy interest rate by 10 basis points to 1.9 percent, marking a reduction in the interest rate for the first time since August 2022.
Metal stocks gained swiftly in Wednesday's session, enabling the benchmark index Nifty50 to rise for the third day in a row a day after China’s central bank reduced its short-term policy interest rate.
On Tuesday, the People's Bank of China cut its policy interest rate by 10 basis points to 1.9 percent, marking a reduction in the interest rate for the first time since August 2022.
Sectoral benchmark index Nifty Metal closed in green with Tata Steel, JSW Steel and APL Apollo Steel Tubes leading the gain.
Nifty Metal jumped over a percent with most stocks ending higher. The sectoral index closed 1.42 percent higher while Nifty50 ended 0.21 percent higher on Wednesday.
Shares of JSW Steel closed 2.08 percent higher at Rs 772.75 apiece on BSE on Wednesday. Meanwhile, IDBI Capital recommended ‘Hold’ on the stock with a target price of Rs 720 per share, indicating a potential downside of 6 per cent from Wednesday's closing price.
Tata Steel shares ended in green with 2.39 percent gain on Wednesday at Rs 113.75 apiece on BSE. Last month, financial services firm Centrum recommended a ‘buy’ rating on the stock with a target price of Rs 133.
Hindalco was one of the top gainers in the Nifty pack on Wednesday and shares of the company closed at Rs 425 apiece, up 0.89 per cent on BSE. The metal stock hit a session’s high of Rs 430.1 on BSE. Earlier this month, financial services firm Geojit recommended a ‘Hold’ rating on Hindalco stock at a target price of Rs 440 apiece.
APL Apollo Tubes Ltd shares closed 4.3 per cent higher at Rs 1349.1 apiece on BSE on Wednesday.
China’s surprise rate cut indicates a recovery in Asia’s largest economy going forward and the move is aimed at advancing growth in the country. This is a positive development for metal companies as China’s export steel price rose 14 percent so far in the calendar year 2023.
As per recent economic indicators, China’s inflation remained close to zero in May 2023, while the manufacturing Purchasing Managers' Index (PMI) rose to an 11-month peak, indicating an enhanced economic recovery.
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