Metal sector remains strong despite market weakness; JSW Steel leads Sensex gains!

Indian headline indices fluctuated between modest gains and losses throughout the session. The capital goods and fast-moving consumer goods (FMCG) sectors performed the worst, whereas the BSE Power, BSE Utilities, and BSE Metals sectors impressed investors with gains of over 3% each in an otherwise sluggish market. 

During the quarter earnings season, the metals industry underwent a roller coaster ride, with mixed financial results and conflicting investor sentiments. BSE Metals, which gained around 7.5% over the last month, was one of the best-performing sectors, despite major players in the metals and mining industries, such as Tata Steel, Vedanta, and Hindustan Zinc, posting disappointing quarterly results. 

In comparison to the same quarter last year, Vedanta Ltd recorded a 40% decline in consolidated net profit for the April-June quarter of FY24, coming in at Rs 2,640 crore compared to Rs 4,421 crore. The consolidated net profit of Tata Steel plunged 93% year-on-year to Rs 525 crore, impacted by its operations in Europe. 

Shares of Jindal Steel & Power and Hindalco Industries, on the other hand, topped the advances in the BSE Metal pack today, with gains of 5.61% and 4.02%, respectively. Shares of JSW Steel Ltd, the top BSE Sensex gainer today, soared more than 3% as the company announced a net profit of Rs 2,428 crore for the quarter that ended in June, 189% higher than the same quarter the previous year. JSW Steel replaced HDFC on the BSE Sensex following the merger of HDFC and HDFC Bank. 

The Union Budget 2023-24 has placed a strong emphasis on infrastructure and development, which will benefit the metals and mining sector in the long run. Under the Atmanirbhar Bharat 3.0 package, a production-linked incentive scheme has been introduced in the speciality steel sector. The ‘Make in India’ initiative of the Indian government seeks to boost the manufacturing sector’s share of GDP. 

Keep a close eye on the metals and mining industries in light of their future potential!

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.