Death Cross: Nifty metal forms a death cross; Brace for further pain!

The trend has changed for metal stocks. After a massive outperformance last year, the metal counters are fast melting, so much so that the BSE Metal Index remains one. death cross on Tuesday.

The index settled at a 52-week low of 16,901.9, down 29 per cent from its 52-week high of 23,742.99 in two months.

The trend has changed for metal stocks. After a massive outperformance last year, the metal counters are melting sharply, so much so that the BSE Metal Index formed a death cross on Tuesday.

The index settled at a 52-week low of 16,901.9, down 29 per cent from its 52-week high of 23,742.99 in two months.

The death cross is a chart pattern that indicates a transition to a bear hold. This technical indicator occurs when the short-term moving average (eg, 50-day) of a stock/sector moves from above to below a long-term moving average (eg, 200-day).

The formation of a death cross is indicating more pain for the investors.

Most stocks in metals, iron, steel or allied sectors are bearish. Data from Ace Equity shows that over 100 stocks in the metals and related sectors are down more than 20 per cent from their latest peak. More than 20 names have fallen between 50-65 per cent.

Among those who destroy money,

Metals, Nova Iron & Power, Products and India Steel Works declined over 60 per cent.

Well-known names including National Steel, Jindal Stainless,

(Hisar), (SAIL) and iron ore and have destroyed more than half the property of the investors.

ETMarkets.com

Other big names include, (down 48 per cent), (down 47 per cent), Jindal Saw (down 44 per cent), KOICL (down 42 per cent), (down 41 per cent) and NMDC (down 40 per cent). Major money destroyers.

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bluechip firm

And Power, Tata Steel, Vedanta and JSW Steel have also shed 30-45 per cent from their 52-week highs.

Market analysts do not see any improvement in these counters in the near term, thanks to restrictions and restrictions prompted by the Covid-19 scare in China – the world’s biggest consumer of the metal. Meanwhile, India’s iron ore prices are likely to remain marginally higher than marine ore prices due to the export duty of 15 per cent imposed by the government on iron ore and pellets, experts said.

China’s steel spread remains muted, which should support steel prices and limit downside from current levels. However, China’s steel demand is the key to the revival, noted Equirius Wealth.

“The rally in coking coal prices – triggered by the Russia-Ukraine war and weather-related disruptions in Australia – has now ended, perhaps faster than expected. India’s non-integrated steel companies rank among the lowest cost producers in the world. I have emerged.”

The decline in coking coal demand over the past few weeks can be attributed to withdrawal of coking coal supply from Russia and weak global demand.

nomura We believe that coking coal demand in India weakened in May and is likely to remain weak in 1HFY23. This, it said, is putting pressure on profitability in view of the onset of monsoon.

“Demand for coking coal from Australia is likely to remain weak as steel production from China is increasing rapidly as sugar mills are buying coking coal from Russia at lower prices than Australia coking coal,” it said.

Nomura said key economic indicators in China are very weak. “In the first week of June, steel stocks with traders increased due to weak demand due to festive holidays and weather conditions.”

Equirius Wealth said it remains positive on non-integrated steel players, with Jindal Steel & Power as its top pick. It added that NMDC is our best selling call in the ferrous space as the company is likely to be hit hardest by the fall in ore prices in India.

Meanwhile, Nomura has a ‘Reduce’ rating on JSW Steel with a target price of Rs 500, while Sharekhan has a SAIL recommendation of a target price of Rs 80. Sharekhan also has a buy rating for it.

1,740 with a target price of Rs.

“We retain our preference for non-ferrous counters along with Hindalco (target price: Rs 555), Vedanta (target price: Rs 414) and GMDC (target price: Rs 230), Edelweiss Securities said.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)