Metal stocks performing under pressure, with JSPL, JSW Steel, and Tata Steel falling 2% to 3%

On May 26, the Indian stock market was in the pink, but cautiously so, following positive Asian markets. In morning trading, the Sensex rose 37.95 points, or 0.07 percent, to 50,675.48, while the Nifty rose 6.8 points, or 0.04 percent, to 15,215.30.

Jindal Steel & Power, JSW Steel, SAIL, and Tata Steel led the metal index lower by more than a percent.

In a steel market report, Credit Suisse downgraded Tata Steel from outperform to neutral, with a target price of Rs 1,250 per share.

JSW Steel was downgraded from neutral to underperform with a target of Rs 550 per share, and JSPL was downgraded from outperform to neutral with a target of Rs 450 per share.

During the fourth quarter ended March 2021, Jindal Steel and Power announced a massive increase in its consolidated profit after tax (PAT) to Rs 1,900.51 crore, owing to higher profits. In the previous quarter, JSPL’s “net profit after tax from continuing operations” was Rs 82.13 crore, according to a BSE filing.

JSW Steel also announced a massive increase in its consolidated net profit for the quarter ended March 31, 2021, to Rs 4,191 crore, and said it would invest over Rs 25,000 crore on projects in Odisha, Karnataka, and Jammu & Kashmir.

Because of the stock’s high valuations, Kotak Institutional Equities has downgraded it from buy to reduce. The price goal is Rs 640 per share. Steel margins, according to the brokerage company, have reached new highs. Steel price increases, amid cost inflation, seem to be boosting margins.

As per Credit Suisse, JSW has the highest domestic iron ore prices hurting and its been trading at the most volatile valuations out of all four steel companies.

SAIL is still classified as neutral by the global research firm, with a target price of Rs 140 per share.

According to the Financial Times, China’s National Development and Reform Commission would target monopolies in commodity markets to combat “false information and hoarding.” The immediate result was a 7% drop in Dalian iron ore futures to $163 per tonne. Prices have dropped by a fourth after reaching a new peak earlier this month.

Iron ore prices have risen in recent months, continuing the boom that began in 2020, with prices now more than double what they were a year ago. China’s ability to stifle the iron ore market may extend beyond alerts, with steps such as discouraging financial investors and requiring traders to store the product. If investors perceive metals to be a riskier investment, they will unwind positions, causing prices to fall.

 

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