According to stock market experts, economic slowdown in China, Dollar Index rising to 34-year high and supply exceeding demand are the major reasons slide in metal stocks. They also said that Nifty Metal index has dipped from 22,000 levels to 18,800 levels and it is expected to go further down after some rebound. They went on to add that probably the 3 year strong cycle of the metal stock rally is over now and in next few quarter, it may remain under the sell-off heat.
Speaking on the reasons for continuous sell-off metal stocks, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Metal stocks are under sell-off heat despite metal majors reporting reduction in their debt. News of slowdown in China, Dollar Index rising to record 20-year high and supply overtaking demand should be attributed as major reasons for metal stocks' correction. China is leading consumer of metals and slowdown in China has led to decrease in demand for metals. Apart form this, US dollar has been continuously gaining as Dollar Index has surged to its record 20 years high, which has made import of metals dearer for metal companies."
Sumeet Bagadia, Executive Director at Choice Broking said, "BSE Metal index had corrected from near 22,000 levels to around 18,100 levels yesterday. However, today there is some bounce back witnessed in the index in early morning deals. The BSE Metal index has strong support at 18,000 levels and if the index breaks this support then there can be further downside in the metal stocks."
Echoing with Sumeet Bagadia's views, Manoj Dalmia, Founder & Head of Research at Proficient Equities said, "On breakage of 18,000 support, near term target of BSE Metal index would be 17,500 levels and if further selling takes place then it might reach up to 15,500 levels."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
