Metal stocks are in shock after the heavy export duty imposed by the government
On May 23, metal stocks were trading down in the early session as brokerages downgraded the sector after the government's imposition of export tariffs on iron ore and certain steel intermediaries. The majority of metal stocks are trading near their lower circuits.
"We see this as an extremely negative development for the steel sector and expect broad-based multiple de-rating." We downgrade steel/stainless equities under our coverage to either hold/reduce/sell", ICICI Securities said in a note to investors.
Reason for downfall:
To increase domestic availability, the government increased duties on iron ore by up to 50% and on certain steel intermediaries by 15% on May 21.
According to the report, India may lose export opportunities and the move may have an impact on the country's total economic activity.
The implementation of export duties will help other nations increase their share of the global market, which India would lose.
Analysts believe that iron ore export duties will increase domestic supplies, lowering prices. Exports contribute 15–20% of total sales for steel companies such as Tata Steel, JSW Steel, and JSPL.
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