metal stocks: Amidst the huge fall in the stock market, today on January 13, there has been heavy selling in metal shares also. In fact, in the month of December, America has released better than expected job figures. Due to this, expectations of cutting interest rates by the US Federal Reserve have weakened. This is the reason why today the benchmark index of metal sector Nifty Metal fell by almost 4 percent. It closed at 7951 with a fall of 312 points.
Unemployment rate in America fell to 4.1 percent
The US Labor Department released its employment report on Friday, which showed a significant increase in jobs in December. Due to this the unemployment rate fell to 4.1 percent. This strengthened the belief that the US Fed will maintain interest rates for a long time. Traders are now reportedly expecting the Federal Reserve to keep interest rates steady until at least June, while previously expecting a cut in May.
When the US Federal Reserve cuts interest rates, more liquidity is generated in the market, which in turn promotes inflows for companies. Hence a delayed rate cut directly impacts metal stocks.
These metal stocks including Hindustan Copper fell
Hindustan Copper shares fell the most in today’s trade, falling 7 per cent to close at Rs 217.2 per share on January 13. Tata Steel, a key Nifty Metal stock, fell 3.34% to close at Rs 123.15 per share. Other metal stocks that declined heavily included APL Apollo (6.39%), Steel Authority of India (5.55%).
Brokerage’s opinion on metal stocks
The US Federal Reserve cut its key interest rates for the third consecutive meeting in December. Rates were reduced by 25 basis points to 4.25%-4.50%. Brokerage firm Nomura, in its latest note issued on January 10, said that it expects shares of Jindal Steel & Power (JSP) to outperform shares of JSW Steel. It said JSP is “relatively better positioned than its peers”, as it expects EBITDA to improve sequentially.
What is the target price?
The brokerage maintains ‘Buy’ rating for JSP with a target of Rs 1180. This means the stock has a potential upside of 35 per cent from its closing price of Rs 873.4. For JSW Steel, the firm maintained ‘Buy’ rating with a target price of Rs 1220. This means the stock has an upside potential of 38% from its closing price of Rs 883.15. Let us tell you that on January 13, the shares of JSP and JSW Steel have fallen by 4.8% and 2%.
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