Indian metal and mining stocks experienced a notable surge in Monday's trading, with several key players climbing up to 3%. The positive sentiment was particularly strong among steel producers, driving the BSE Metal index up by 1.09%.
Steel Policy Boosts Sector Confidence
The rally in steel stocks was significantly influenced by the release of a draft steel policy by the steel ministry. This new policy proposes crucial measures designed to shield domestic mills from unfair trade practices. Key elements include early detection of abnormal import trends and the timely implementation of anti-dumping, countervailing, and safeguard duties.
Among the top performers, Steel Authority of India Ltd (SAIL) advanced 3.35% to Rs 177.25. Jindal Steel rose 2.38% to Rs 1,039.95, while JSW Steel Ltd added 0.71% to Rs 1177.25. Tata Steel Ltd also saw a modest gain, quoting 0.55% higher at Rs 174.55.
Analyst Picks and Q2 Outlook
Several foreign brokerages have highlighted specific companies within the sector. BofA Securities and Jefferies notably identified JSW Steel Ltd as their top pick in the metals and mining sector.
"India Ebitda per ton for JSW Steel and Tata Steel is likely to contract by Rs 1,500-1,800 per ton. We expect a sharper decline at SAIL, given its higher long steel exposure," BofA Securities stated. The firm picked JSW Steel, citing its strong position to benefit from India's robust long-term steel consumption growth.
Looking ahead, BofA Securities anticipates a sequential decline in Q2 India EBITDA per ton for domestic steel producers, primarily due to lower realizations from seasonally weaker long steel prices and increased coking coal costs. However, healthy volume growth, projected at 4-11% year-over-year, is expected to partially offset this margin pressure.
Jefferies analysts projected a 5-9% quarter-on-quarter EBITDA rise for Tata Steel, Jindal Stainless, and JSW Steel for the September quarter, attributing this to volume growth outweighing margin contraction. They also anticipate a 7% QoQ EBITDA growth for Hindustan Zinc due to higher zinc prices, though Hindalco's consolidated EBITDA is expected to fall by 17% QoQ primarily from weaker aluminum prices.
Broader Sector Performance
Beyond steel, Hindustan Zinc Ltd (HZL) advanced 2.31% to Rs 555.55, and Nalco added 0.6% to Rs 317.05. Hindalco and NMDC traded flat during the session.
The draft steel policy also outlines ambitious long-term projections for the sector. Finished steel consumption is expected to jump significantly from 164 million tons in FY26 to 505 million tons by 2047. Concurrently, crude steel-making capacity is projected to expand from 220 million tons per year to 604 million tons.