Metal Stocks Decline as China's Stimulus Lacks Clarity

resr 5paisa Research Team

Last Updated: 13th December 2024 - 01:48 pm

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Shares of metal companies experienced notable selling pressure on December 13, with key steelmakers such as JSW Steel, Tata Steel, NMDC, and SAIL seeing declines of 3-5%. The downturn followed China's latest stimulus pledge, which, despite reiterating its commitment to economic revival, fell short of providing specific details.

 

China's leadership, during a high-level economic meeting on Thursday, emphasized recent policy shifts and outlined intentions to bolster growth. However, the lack of concrete action plans left investors skeptical, a sentiment that has persisted despite earlier surprises, including a hint at a monetary policy adjustment—China's first in 14 years. Many market participants remain doubtful about the likelihood of large-scale stimulus measures.

 

Since late September, a series of stimulus initiatives aimed at reinvigorating the world's second-largest economy has failed to yield significant results. Economic data indicate persistent deflationary pressures, weak consumer demand, and a struggling housing market.

 

Given that China is the world's largest importer of metals, its economic health directly influences global metal demand and pricing. The ongoing challenges in China have thus weighed heavily on the sector.

 

By 9:38 a.m., shares of SAIL and NMDC had dropped by 4.6% and 4.2%, respectively, while JSW Steel, Tata Steel, and Hind Copper were down around 3% each. Additionally, JSW Steel, Tata Steel, and Hindalco were among the top losers on the Nifty 50 index. The broader Nifty Metal index also fell by 2.4%, making it the worst-performing sector of the day.

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