Metal scrips lose lustre a wee bit

After being on the forefront of the recent stock market rally, metal stocks have lost some sheen, of late.

On Tuesday, when most sectors performed badly on the bourses, the BSE Metals index was the biggest loser with a fall of 2.93 per cent to 10074.55 even as the Sensex moved down by 2.25 per cent to 11646.78.

However, over the past one month, the Metals index has gained by 23.11 per cent against the Sensex rise of 6.36 per cent.

Major losers in the metal sector on Tuesday were Kalyani Steels (down 7.06 per cent), Essar Steel (down 7.05 per cent), Monnet Ispat (down 6.86 per cent), Jindal Saw (down 6.6 per cent), Sail (down 5.38 per cent), Jindal Stainless (down 5.07 per cent), Jindal Steel & Power (down 4.79 per cent), Tata Steel (down 4.6 per cent) and Enkei Castalloy (down 4.34 per cent).

Mitesh Shah, assistant vice-president PCG sales at Brics, said, "The metal sector was primarily dragged down by industry majors such as Tata Steel, SAIL and Jindal. These stocks have been outperforming the markets for quite some time. After the rally, they are witnessing profit booking. Moreover, there has been some panic on the back of the general fall in markets and FIIs have turned net sellers in the F&O segment."

Analysts said the fall in steel stocks was also owing to the decrease in March quarter earnings of Wuhan Iron and Steel Company in China. Its profit fell by 84 per cent. The Chinese steel major is said to have suffered on account of higher iron ore prices.

However, Hindustan Zince gained 12.38 per cent on Tuesday. The stock has been up on the relentless rise in zinc prices in the both international and domestic markets.

Even as the markets are expected to remain rangebound in the 11,000-12,000 levels till the monsoon, metal is one sector that may perform better in the coming months.

Shah feels that the sector should relatively outperform the market as metal prices continue to remain firm. Frontline stocks like Tata Steel and Hindalco share a positive outlook.

The major gainers in the sector over the past one month have been Hindustan Zinc (up 114.11 per cent), Kalyani Steels (up 71.36 per cent), Sterlite Industries (up 47.55 per cent), Tata Metaliks (up 38.81 per cent) and Tata Steel (up 26.3 per cent).