Jindal Steel, Tata Steel, JSW Steel, Vedanta, SAIL extend gains, up 2-4%

Shares of metal producers such as Jindal Steel & Power Ltd, Tata Steel Company Ltd, JSW Steel Ltd and Vedanta Ltd climbed 2-4 per cent in Friday's trade on hopes the beginning the rate cut cycle will drive economic growth and, thus, demand for infrastructure and allied industries of such as construction, cement and steel.

Jindal Steel shares surged 3.97 per cent to Rs 841.75. Tata Steel advanced 3.32 per cent to Rs 136.95. JSW Steel and Vedanta gained 2.5 per cent and 2 per cent, respectively. SAIL, Hindalco and NALCO also added up to 2 per cent.

“New Governor, new regime, new cut. We have been arguing for a while now that growth faces strong headwinds, underlying inflation is low and high policy rates have outlived their utility. So the RBI’s policy pivot was long due and in line with our expectations. While Governor Malhotra suggested data dependence in his policy speech, we expect that this is the start to a deep rate cut cycle – we see another 75bp of rate cuts in the pipeline this year,” said Aurodeep Nandi, India Economist, Executive Director at Nomura.

The metals sector’s EV/Ebitda s hovering close to its 10-year historical average of 6.1 times amid weakness in global demand and pricing. Data showed flat steel prices increased to Rs 48,100 per tonne om January 2025 exit against Rs 46,500 per tonne MoM in December 2024, driven by a reduction in cheap imports and anticipation of safeguard duties, MOFSL noted.

"Rebar prices continue to trade at a premium to flat steel prices and remain close to Rs 53,000/t in Jan’25. Coking coal prices remained range-bound between $200-220/t over the last 6 months on account of muted demand. Non-ferrous metal prices remain at a healthy level MoM in Jan’25," it said.

Axis Securities in its February note said select value stocks from the metals, commodities and cement sectors, among others, are well-placed to deliver superior performance.

"The RBI's latest decision to reduce the repo rate by 25 bps to 6.25 per cent will enhance liquidity, promote borrowing and support consumer demand. This will, in turn, induce activity in the residential and commercial sectors, which, in turn, will support its allied industries of construction, cement, and steel, said Dinesh Yadav, Founder and MD of Fine Acers.