Metal Stock Price: Metal stocks fell 18% last week. Will there be more sales this week?
Although many planned to sell in the sector they needed to calm down after massive rallies, the trigger was the precarious situation in China which threatens trade across the world.
“The recent lockdowns in China due to the upsurge in Covid-19 cases have depressed the demand for steel in the country and as the major demand for steel comes from China, the drop in demand has led to the collapsing steel prices and ultimately falling metal prices result in collapsing metal stocks,” said Mohit Nigam, Head – PMS, Hem Securities.
The biggest loser in the metal pack was , which fell almost 19%. It was followed by 10 to 14% of accidents in , , and .
Other constituents of the Nifty Metal Index –
& Power and – have also fallen in the 6-9% range over the past five sessions.
Analysts believe that the sector’s weakness could continue in the short term. However, in the long term, the rally in space may not be over yet.
“Technically too, there may be some pressure in the short term, as the price action has created bearish trends in the daily time frame, but in the long term, the bulls lead the price action over the bears and it have to accumulate that stock with every long-term decline in gains,” Nigam said.
Nilesh Jain, Analyst – Technical Research and Derivatives, Centrum Broking, said the index is at a major inflection point and if the support levels shown in the chart below are removed, the drop could be exacerbated.
“Metals have had a good rally up for two years and now we are seeing some good profit taking due to falling metal prices across the globe. As the chart above shows, the index is currently at a major make or break level,” Jain said.
“So if the support is roughly the same, we can expect a pullback, however, if the support level is broken, further selling may continue.”
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)