Why Metal Stocks Like Vedanta, Tata Steel, and Hindalco Are Rising Amid Market Crash Today
Metal stocks like Vedanta, Tata Steel, JSW Steel, and Hindalco are rising despite the market crash today. Learn how China's property market reforms are driving metal stock gains.
New Delhi, September 29, 2024 – Despite a sharp fall in the overall stock market today, metal stocks like Vedanta, Tata Steel, JSW Steel, Hindalco, and SAIL soared, with several touching record highs. The Nifty Metal Index and BSE Metal Index hit new all-time highs, showcasing the strong performance of this sector in contrast to the broader market crash. The rally in metal stocks came amid positive developments in China’s real estate sector, which have bolstered investor sentiment.
Nifty and BSE Metal Indices Hit Record Highs
Both Nifty Metal and BSE Metal indices surged to new record levels during early trading today. The Nifty Metal Index jumped 200 points to touch 10,263, while the BSE Metal Index climbed to an all-time high of 34,784.25. The surge in metal stocks like JSW Steel, Tata Steel, Vedanta, and Hindalco boosted these indices, driven by renewed optimism from China’s property market reforms.
| Metal Stock | Percentage Gain | New High (Rs) | Market Cap (Rs Crore) |
|---|---|---|---|
| JSW Steel | 2.52% | 1,027 | 2.5 lakh crore |
| Tata Steel | 2.22% | 170.20 | 2.11 lakh crore |
| NMDC | 5.14% | 247.10 | 71,917 crore |
| SAIL | 2.49% | 143.95 | – |
| Vedanta | 2% | 523.60 | 2.01 lakh crore |
| Hindalco | 2.30% | 764.40 | 1.70 lakh crore |
Metal Stocks Lead Gains on Sensex
Among the top performers on the Sensex were JSW Steel and Tata Steel, with JSW Steel hitting a new record high of Rs 1,027, up 2.52% from its previous close. The company’s market capitalization also surged, reaching Rs 2.5 lakh crore. Similarly, Tata Steel shares rose 2.22% to Rs 170.20, pushing the company’s market cap to Rs 2.11 lakh crore.
Meanwhile, shares of NMDC climbed 5.14% to Rs 247.10, and SAIL rose over 2% to Rs 143.95. The rally extended across the sector, with Vedanta gaining 2% and Hindalco reaching a new high of Rs 764.40.
Why Are Metal Stocks Rising Amid a Market Crash?
The surge in metal stocks comes at a time when the broader market is experiencing significant declines. The primary driver behind this divergence is positive news from China’s real estate sector. On Monday, real estate shares in China surged after major cities, including Shanghai, Shenzhen, and Guangzhou, announced the relaxation of homebuying curbs.
This rally is linked to the easing of restrictions on home purchases, which is expected to drive demand for construction materials like steel and aluminum. According to a Bloomberg report, Guangzhou became the first Tier-1 city to remove all restrictions, allowing more buyers to enter the market. The local authorities have stopped reviewing homebuyer eligibility and lifted limits on homeownership. Similarly, Shanghai and Shenzhen have allowed more people to buy homes in suburban areas, further boosting demand for housing materials.
Impact of China’s Property Market Reforms on Metals
China is a major global consumer of metals, particularly steel and aluminum, due to its massive construction and infrastructure sector. Recent steps by the Chinese government to revitalize the property market have been welcomed by metal producers globally, as they are expected to result in increased demand for these commodities.
On September 24, metal stocks had already surged up to 6% after China announced measures to boost the property market. This included reducing interest rates on existing mortgage loans and unifying down payment ratios for new mortgages. These moves are seen as part of a broader effort by the Chinese government to stimulate growth in the real estate sector, which has a direct impact on global demand for metals.
Investor Sentiment and the Outlook for Metal Stocks
Investors are optimistic about the future of metal stocks, particularly in light of China’s efforts to stabilize its property market. The metal sector is closely tied to industrial growth, and with China being one of the largest consumers of metals, any positive developments in the country have a significant impact on global prices and stock performance.
Additionally, ongoing government projects, infrastructure development, and a potential increase in global demand for metals are contributing factors to the strong performance of companies like Vedanta, Tata Steel, JSW Steel, and Hindalco. As long as these favorable conditions persist, the metal sector is likely to remain a bright spot in an otherwise volatile market.
The rally in metal stocks today, despite the broader market crash, underscores the importance of China’s real estate market in driving demand for metals. With the relaxation of homebuying restrictions in major Chinese cities, metal producers are expected to benefit from increased demand for their products. JSW Steel, Tata Steel, Hindalco, and other metal stocks continue to climb, and investor sentiment remains positive.
As the metal sector keeps gaining momentum, investors should keep an eye on global developments, particularly in China, to assess the long-term outlook for these stocks.
