Metal stocks witnessed strong buying interest on Monday, rallying up to 4% amid optimism over domestic steel price improvement, supportive global cues, and positive sentiment surrounding the recent GST rate cut.
Shares of Steel Authority of India Ltd (SAIL) shares climbed 4.17%, while JSW Steel and Lloyds Metals and Energy also advanced. Tata Steel share price rose nearly 3% to touch a fresh 52-week high. Other sectoral majors, including APL Apollo Tubes, and Jindal Steel & Power, contributed to the uptrend, pushing the Nifty Metal index higher by nearly 1.4%.
The rally gained momentum after global brokerage Morgan Stanley turned constructive on Indian steelmakers, citing demand recovery, benefits from China’s steel supply reforms, and a weakening US dollar.
Morgan Stanley expects select steel stocks to outperform the broader India Materials sector over the next few months. The brokerage upgraded its ratings on JSW Steel, Tata Steel, and SAIL, while maintaining an Equalweight stance on Jindal Steel & Power.
JSW Steel: Upgraded to Overweight, target price raised to ₹1,300.
Tata Steel: Upgraded to Overweight, target price raised to ₹200.
SAIL: Upgraded to Equalweight, target price raised to ₹140.
Jindal Steel & Power: Maintained Equalweight, target price raised to ₹1,150.
The brokerage has also revised upwards its steel price estimates by 3% each for FY27 and FY28, projecting an expansion in domestic steel spreads as demand improves.
GST Rate Cut Impact
Adding to the positive outlook, PL Capital noted that while GST on steel and aluminium remains unchanged at 18%, recent rate adjustments in related sectors are expected to support metal demand:
Auto sector GST cut: A strong positive for steelmakers like Tata Steel and JSW Steel.
Consumer durables rate cut: Favourable for both steel and aluminium producers.
Household steel items: GST reduced from 12% to 5% on utensils and other iron/steel articles, seen as positive for Jindal Steel & Power.
Milk cans (iron / steel / alloy): Tax cut from 12% to 5%, a mild positive for Jindal Stainless.
Coal and lignite: GST raised from 5% to 12%, negative for Coal India, GMDC, and NLC India, though the removal of clean energy cess may offset the impact.
Ammonia: GST reduced from 18% to 5%, but seen as insignificant for aluminium producers such as Hindalco Industries, Vedanta, and NALCO.
Further boosting sentiment, Avinash Gorakshakar, SEBI-registered market expert, said, “Markets are expecting a US trade deal with India very soon. This will be positive for IT and metals where the US is a big export market. Also, China is expected to be a large buyer ahead. All in all, domestic demand for metals is also likely to rise with large government capex and private sector capex,” he noted.
Global factors also lent support to the rally. The US dollar weakened after softer labour data bolstered expectations of a 25 basis points rate cut by the US Federal Reserve at its September 17 meeting. A weaker dollar typically benefits commodities, including metals.
Overall, the combination of positive domestic demand outlook, global policy shifts, and currency tailwinds helped metal counters extend gains, lifting the sectoral index to fresh highs.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
