Nifty Metal slips 5% in September post 29% 1 yr rally, October comeback ahead? Hindustan Zinc, NMDC, NALCO may shine

Nifty Metal has declined nearly 5% over the past one month with National Aluminum Company (NALCO), NMDC, Hindustan Copper, Adani Enterprises, Vedanta Limited, etc emerging as the top laggards in September. Further upside in the index in October could depend on global metal prices, demand trends and domestic growth, however, elevated valuations may cap gains, according to experts.

With just one day left for the beginning of the new month, experts see October to be more stock-specific performance in the metal sector rather than a broad sector rally. Aluminium and copper linked businesses could benefit from the current scenario. Here's the list of top Nifty Metal gainers and losers at 12:30 pm on Tuesday, September 29.

Nifty Metal was up 0.16% at 12,874.85 points at 12:18 pm on Tuesday, September 29. The index has declined 4.8% over the last one month. But it has surged 2.63% in three months and 15.3% in three months.

Nifty Metal may remain volatile in October after recent gains and further upside could depend on global metal prices, demand trends and domestic growth, according to Ravi Singh, Chief Research Officer from Master Capital Services Limited.

“A stronger dollar, higher energy costs, rising supply and weaker global demand could pressure metal stocks. Commodity prices, Chinese demand and domestic infrastructure spending may support upside,” Singh explained.

“The metal basket is unlikely to move uniformly. Aluminium and copper-linked businesses could benefit more if supply constraints and long-term demand from power, electrification and infrastructure remain strong. Steel producers, meanwhile, will remain more dependent on domestic demand and Chinese supply discipline,” noted Tushar Badjate, Director of Badjate Stocks & Shares Private Limited.

Hindustan Zinc, NMDC and National Aluminium Company offer relatively comfortable valuations compared with other peers, highlighted Badjate.

“Hindustan Zinc could remain supported by its zinc and silver exposure, while NALCO may remain sensitive to aluminium-price movements. Earnings, commodity prices and company-specific developments remain key,” Dr Ravi Singh explained.

Abstaining from taking a blanket view on metal sector stocks, Tushar Badjate, advises investors to "look at debt, cost of production, capacity utilisation, cash flows and the extent to which higher raw-material costs can be passed on." After the sector's strong run, buying on sharp corrections appears more sensible than chasing momentum, he added.

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