BSE Bankex is down by 1166 points or 2.25 percent on 17 January trading session and HDFC Bank is seen contributing 70 percent of the index fall on an intraday basis.
The Nifty Metal index was the second worst performer for the day, behind Nifty Bank and fell 2.5% to the day s low of 7,736.15. In the 15-stock index, 14 were on the losing side
Once again on Tuesday there were reports that the Chinese government is planning another push for revival with a special bond issue by their central bank. Now this is not the first time that they have made an attempt, probably a third monetary stimulus attempt. One cannot be sure of what they say and do, but there s another fact: over the last two decades there have been many issues which the Chinese economy has faced, right from debt to GDP concern to shadow banking to property crisis. They all have been resolved and the economy has been able to make a comeback. The biggest impact of the Chinese revival is felt on two things, global metal prices and to some extent oil price. While to take advantage of oil is not something which is easy play for Indian investors, but metal stocks are something which investors with the ability to take contrarian investment decisions, may look at.
Rakesh Arora discusses the outlook for the commodity sector, highlighting the factors that are supportive of a commodity price rally, such as China s potential stimulus and weaker US dollar. However, he notes that demand is still missing and China s production and export of surplus metal are pushing prices down. Arora also explains the divergence between the mining and processing industries, with mining commodity prices going up while steel prices come down. He suggests that it may be safer to invest in mining commodities.
Despite Indias robust economic growth, vibrant real-estate sector, and the governments massive infrastructure push, metal stocks have lagged the benchmark equity indices. Will they play catch-up?