"The metals sector is facing headwinds due to the struggle of the housing sector in China, which has been a growth engine for the last 15-20 years, and the cut in China s key policy rates is not enough to revive the sector. Non-ferrous space is preferred over steel, as aluminium and copper have very low inventories in the system. Metal stocks have already run up, and valuations are not supportive for investing in metal stocks."
Rakesh Arora, founder of GO India, believes that while greed has taken hold, he does not foresee market collapse in India as both financials and IT are currently trading at their long period averages. While Dalmia and Ultratech have announced disappointing figures, cement industry insiders are speculating 15% growth in the sector this year. A good monsoon would provide further tailwind via rural demand.
So, people were not very confident that Foxconn is a serious player. And secondly, Vedanta itself is going through a lot of financial issues. They do not have the wherewithal or the funding to be able to do this kind of big project. So, this thing was a non-starter from day one and it does not come as a surprise at all that this has been called off.