The BSE Metal Index has surged to a 17-month high, bolstered by favorable policies from China and rising domestic prices. This robust performance marks a notable trend, with the index strengthening for seven out of the last 11 trading days. China’s policies have played a pivotal role in instilling confidence among investors in the Indian market.
BSE Metal Index at a 17-Month High
China’s recent policy announcements include a reduction in mortgage rates to support the property sector and lower down payment requirements for first- and second-time homebuyers. Additionally, existing borrowers can now renegotiate interest rates on loans taken for their first homes. While these measures provide support, it’s essential to note that they may have limited benefits due to low demand from first-time buyers, stagnant income levels, elevated youth unemployment, and a growing elderly population.
China’s Influence on Indian Markets
From a market perspective, strong demand has enabled steel companies to implement multiple price hikes since August 2023. Unlike previous challenges linked to global price fluctuations and monsoons, steel prices have stabilized and are gradually trending upwards.
Domestic brokerage firm Motilal Oswal acknowledges the positive domestic demand environment and anticipates that the recent price hikes will bolster margins in the second half of the fiscal year 2023-24. This should help offset the impact of rising coking coal prices. In light of these developments, Motilal Oswal has assigned a buy rating to Jindal Steel and Power, emphasizing the ongoing strength in demand for long steel, driven by the momentum in infrastructure projects.
