Metal stocks rose on Tuesday, 25th July 2023, with just a few days left for the July monthly expiry in the Indian stock market. The Nifty Metal index closed at 6583.65 up 2.94% from the previous day's close. The rise was led by gains in stocks of steelmakers, copper producers, and aluminum companies.
There are a few reasons for the rise in metal stocks.
First, global metal prices have been rising in recent weeks, as demand has increased from China and other major economies along with the Ongoing war in Ukraine
Second, the Indian rupee has been weakening against the dollar, which makes imported metals cheaper for Indian buyers.
Third, the expiry of monthly options contracts on Thursday is likely to have led to some short-covering by investors.
- Options traders may be adjusting their positions ahead of the monthly July expiry.
- Options traders who are holding bullish positions in metal stocks may be buying more contracts to lock in their profits. This could also be contributing to the rise in metal prices
It is too early to say whether the rise in metal stocks will continue in the August series. Some factors could support further gains, but there are also some risks to consider.
Here are some of the factors that could influence the future of metal stock beyond the July 2023 F&O expiry::
Global economic growth:
- If the global economy grows, it could lead to increased demand for metals. This is because metals are used in a variety of industries, including construction, manufacturing, and transportation.
Demand for metals from China:
- China is a major consumer of metals, so any changes in Chinese demand could have a significant impact on the global metal market.
Supply of metals:
- The supply of metals is also a key factor that could influence the future of metal stocks. If the supply of metals increases, it could lead to lower prices. However, if the supply of metals decreases, it could lead to higher prices.
Geopolitical factors:
- Geopolitical factors, such as wars or sanctions, could also have an impact on the global metal market.
The interest rate environment:
- If interest rates continue to rise, it could weigh on the demand for metals.
- The strength of the Indian rupee.
- The release of economic data, such as industrial production and manufacturing PMI.
Conclusion:
If you are considering investing in metal stocks, it is important to consider all of the above factors and to do your research before making any decisions.
The current outlook for metal stocks in the days leading up to the July expiry is slightly bullish and the current trend suggests that metal stocks could continue to rise in the coming day because this is a time when options traders need to square off their positions, and also due to Increase in margin for options traders as the expiry of monthly options contracts is in just 2 days; can lead to increased volatility in the stock market and In the case of metal stocks, this volatility could lead to further gains.
Here are some of the metal stocks that saw gains on Tuesday:
- JSW Steel (NS:JSTL): up 3.21%
- Tata Steel (NS:TISC): up 3.25%
- Hindalco Industries (NS:HALC): up 3.82%
- Jindal Steel & Power (NS:JNSP): up 5.62%
- SAIL (NS:SAIL): up 2.61%
- NMDC (NS:NMDC): up 2.1%
It is important to note that the metal market is volatile, and prices could easily reverse course in the near future as well.
Disclaimer: The above article is for self-learning/educational purposes. The analysis was conducted by the following students: G10 and Dimple for learning purposes. Investing involves substantial risk. Neither the author nor the publisher, nor any of their respective affiliates make any guarantee or other promise as to any result that may be obtained from using the research/report. While past performance may be analyzed in the research, past performance should not be considered indicative of future performance. No reader should make any investment decision without first consulting his or her own personal financial and/or investment advisor and conducting his or her research and due diligence, including carefully considering whether it is suitable for your particular circumstances, as this research/report does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendation appropriate for you. In the event, that any information, commentary, analysis, opinions, advice, and/or recommendations in the research/report prove to be inaccurate, incomplete, or unreliable or result in any investment or other losses, the author, the publisher, and their respective affiliates disclaim any and all