Indian Stocks Rise as Metal Prices Surge, Boosting Earnings Outlook

Strategic Insights -

Indian stocks experienced a rally, ending a two-day decline, driven by surging metal prices, which enhanced the earnings prospects for raw material producers. Key metals such as copper and zinc saw significant price hikes in Shanghai, spurring gains among producers like Sterlite Industries (India) Ltd. and Tata Steel Ltd. Analysts predict improved global demand for metals this year, citing improving economic growth, with the potential for metals prices to rise further.

Key Takeaways:

  • Sterlite Industries (India) Ltd., the largest copper and zinc producer, led gains among raw material producers after copper prices jumped in Shanghai, rising 2.1 percent to 762 rupees.
  • Tata Steel Ltd. climbed 2.7 percent as demand for metals is expected to be higher this year, driven by improving economic growth.
  • Expectations that Federal Reserve Chairman Ben S. Bernanke will signal U.S. interest rates will remain near a record low this week are boosting metal prices.
  • The Bombay Stock Exchange's Sensitive Index (Sensex) rose 1 percent to 16,352.76, with the S&P CNX Nifty Index on the National Stock Exchange increasing 1.1 percent to 4,896.55.
  • Hindalco Industries Ltd., the biggest aluminum producer, rose 2.5 percent to 153.65 rupees, and Tata Steel, the biggest producer of the alloy, gained 2.7 percent to 575.75 rupees.
  • Macquarie Group Ltd. predicts increased demand from China will bolster copper prices by 8.9 percent in the short term.
  • A basket of six commodities traded on the London Metal Exchange advanced 1.9 percent on February 19.
  • India's biggest refiner, Raw Materials Shree Renuka Sugars Ltd., rose 1 percent to 181.8 rupees after it agreed to buy 51 percent of closely held Equipav SA Acucar e Alcool for $329 million to secure raw material supplies.

Statistics:

  • The Bombay Stock Exchange's Sensitive Index (Sensex) gained 161.13, or 1 percent, to 16,352.76 at 11:14 a.m. in Mumbai.
  • The S&P CNX Nifty Index on the National Stock Exchange rose 1.1 percent to 4,896.55.
  • Tata Steel climbed 2.7 percent to 575.75 rupees.
  • Hindalco Industries Ltd. rose 2.5 percent to 153.65 rupees.
  • Copper prices rose as much as 6.4 percent in Shanghai.

Sources:

  • Euclid Infotech Pvt. Ltd.
  • Syndigate.info
  • Albawaba.com
  • Khandwala Securities Ltd.
  • Macquarie Group Ltd.
  • Moody's Investors Service
  • Mumbai Stock Exchange
  • National Stock Exchange