China stimulus gives stock market ride on metalled road

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Metals gain from China stimulus package in stock market

By S Jha

New Delhi, September 25: Global equity markets are trending higher on the back of a large China stimulus package. The US bourses shrugged off weak consumer data to further rise on Tuesday.

Hang Sang, measure of China’s equity market, is on a roller-coaster. Within a fortnight, it vaulted by 2000 points. On Tuesday, Hang Sang rose by four per cent.

China’s Central Bank on Tuesday unveiled a large stimulus package. The move was much awaited to lift the sagging economy of China.

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The housing market of China has been in deep trouble since the outbreak of the Covid-19 pandemic. The cascading effects sank the consumer expenditure in China afterwards.

The China Central Bank unveiled a cut in short-term interest rates. It came close on the heels of the US Federal Reserve cutting rate for first time in four years by 0.50 points.

The Chinese bank also announced measures which may help pump prime the economy. Stocks with exposure to China gained on Tuesday in the US, as well as other equity markets.

Past trends per market participants show that China’s stimulus packages bring good fortunes for metal stocks. In India, the metal index gained most in Tuesday trade.

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The Indian indices took pause on Tuesday after lifting tides brought quick gains to the bourses. The metal index posted gains of 2.78 per cent on Tuesday.

A revival of the housing sector in China could be good news for the Indian metal companies. Tata Steel led the charge on the street on Tuesday.

The scrip of the steel major was sharply higher by almost five per cent. Chartists are taking close look at the scrip of Tata Steel, claiming that it is in the midst of the third of the Elliot waves.

Hindalco was also sharply higher in Tuesday’s trade. The aluminum major gained four per cent. Hindalco broke through last peak of ₹711.85, which was seen on August 26 this year. It closed at ₹718 on Tuesday.

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JSW Steel was also trending in Tuesday’s trade. Small and medium sized metal scrips were also in demand on the street.

National Aluminum Company was the top gainer of metal index. It rose by over six per cent.

Market participants now spotlight metal stocks to make gains from China’s stimulus package. The US bourses shrugging off weak consumer data on Tuesday per market participants signal that bulls are ruling the streets globally.

Disclaimer: This article makes no recommendation for buy or sell of shares of any company.

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