The Indian metal sector witnessed a remarkable performance in 2023, characterized by robust growth and resilience amidst challenging market conditions. Despite global economic uncertainties and supply chain disruptions, the sector showcased resilience, driven by a combination of domestic demand, infrastructure projects, and favorable government policies.
The Nifty Metal Index, which measures the performance of metal-related stocks in the stock market, also showed positive growth, reflecting the sector's overall strength.
In 2024, the Indian metal sector is expected to continue its growth trajectory, driven by several factors. The infrastructure sector is anticipated to remain a key growth driver, supported by government initiatives such as the National Infrastructure Pipeline and the Bharatmala Pariyojana. Investments in infrastructure projects, including roads, railways, airports, and urban infrastructure, are expected to spur demand for metals, particularly steel and aluminum.
Before proceeding further let's know more about the Nifty Metal Index.
What Is the Nifty Metal Index?
The Nifty Metal Index typically includes a varying number of metal-related companies listed on the National Stock Exchange (NSE) of India. However, the exact total number of companies in the index may change over time due to factors such as index rebalancing, changes in market conditions, and adjustments made by index providers.
As of the latest available data, the Nifty Metal Index consists of around 15 constituent companies. These companies are selected based on predefined criteria, including market capitalization, liquidity, and representation of the metal sector within the stock market.
While the total number of companies in the index may fluctuate, the index aims to provide investors with a diversified representation of the metal industry's performance within the Indian stock market.
The level of the NIFTY Metal Index indicates the total free float market value of all the companies included in the index in relation to a specific base market capitalization value. This index is calculated using the free float market capitalization method.
The NIFTY Metal Index is useful for several things, including creating index funds, ETFs, and structured products as well as benchmarking fund portfolios.
In essence, a weighted average of the 15 businesses that make up NIFTY Metal is calculated depending on the size of the companies being traded as determined by their free float market capitalization. The term "free float" describes the number of shares that are easily traded; it does not include locked-in shares or shares that are difficult to trade, such as shares pledged by promoters, etc.
How to buy Nifty Metal Index?
The simplest method to put money aside while you are busy with life and have it work for you is through investing. You must follow these steps in order to invest in nifty metal index stocks.
Step 1: Select a reputable broker
Step 2: Create a Demat account online
Step 3: Deposit enough money in your Demat account
Step 4: Purchasing Nifty Metal stocks can be done in one of three ways:
- Purchase stocks at a rate equal to their weight in the Nifty Metal Index.
- Purchase any specific stock or collection of stocks based on your study of the Nifty Metal Index.
- Purchase any specific stock or collection of stocks based on your study of the Nifty Metal Index.
- Buy / Sell the Index Futures of Nifty Metal Index.
Step 5- Find your Entry price and exit price for better risk management, in case your analysis goes wrong.
Nifty Metal Index Constituents & Nifty Metal Index Stock Weightage
Each stock's weight in the index is determined according to its free-float market capitalization, and at the time of rebalancing, no stock may have a weight greater than 34% or the combined weight of the top three stocks greater than 63%.
In the NSE, 15 businesses are listed under the Nifty Metal Index. The list of metal stocks and their weights as per the latest available data on 21st Feb, 2024, are shown below.
- Hindalco Industries (HINDALCO) – 15.17%
- JSW Steel (JSWSTEEL) – 14.00%
- Adani Enterprises (ADANIENT) – 14.77%
- Vedanta Ltd. (VEDL) – 6.57%
- Jindal Steel & Power (JINDALSTEL) – 4.98%
- NMDC Ltd. (NMDC) – 4.50%
- APL Apollo Tubes (APLAP OLLO) – 4.79%
- Steel Authority of India (SAIL) – 3.17%
- National Aluminum Co. (NATIONALUM) – 2.40%
- Hindustan Zinc (HINDZINC) – 1.44%
- Ratnamani Metals & Tubes (RATNAMANI) – 1.62%
- Hindustan Copper (HINDCOPPER) – 1.70%
- Jindal Stainless Ltd. (JSL) – 3.58%
- Welspun Corp (WELCORP) – 1.38%
Nifty Metal Index Fluctuation throughout the week:
NIFTY METAL: 7987.90
On the weekly timeframe, the index has consistently formed higher highs and higher lows, transitioning from the polarity zone where the prior resistance of the 2018 swing high now acts as a support area as of 2022. Looking ahead to recent weeks, the index is rebounding from the polarity of a rising trendline connecting from January 2023, indicating the continuation of the upward trend.
Moreover, the index maintains its position above key averages such as the 20-week and 50-week exponential moving averages.
In addition, the ratio chart of NIFTY METAL against NIFTY suggests that it is on the brink of breaking out from a trendline connecting from 2018.
Going ahead we expect the prices to go higher till the level of 8500 followed by 8700, the Bullish view will be negated if we see prices sustaining below 7500 level.
5 Nifty Metal Stocks – Our Best Recommendations
1) NMDC
NMDC is currently trading close to its all-time highs, indicating robust momentum in the market. The stock has been consistently forming higher highs and higher lows on the weekly scale, following a breakout from the inverted head and shoulders chart pattern, affirming the continuation of the upward trend.
An important observation is the recent breakout from its multi-year high in 2010, indicating a robust price structure and underlying strength in the stock.
Furthermore, the ratio chart of NMDC against NIFTY has witnessed a breakout from a sloping trendline connecting from 2011, suggesting sustained outperformance compared to the broader market.
Going ahead we expect the prices to go higher till the level of 285, the Bullish view will be negated if we see prices sustaining below 228 level.
2) SAIL
SAIL has been trading near its 52-week high, indicating robust momentum in the market. The stock recently broke out from a significant falling trendline dating back to 2007, accompanied by substantial volume accumulation above the 21-week average volume.
The ADX study reaching the 32 mark, with the +DI at 37, signifies that the bullish momentum is supported by strength in the market.
Furthermore, SAIL has consistently maintained its position above both the 20-week and 50-week averages, further reinforcing the bullish trend.
Going ahead we expect the prices to go higher till the level of 153, the Bullish view will be negated if we see prices sustaining below 118 level.
3) WELCORP
WELCORP is currently moving within a clear rising trend, consistently forming higher highs and higher lows since June 2020.
Additionally, the stock is maintaining a strong position above its 2008 multi-year breakout level, indicating a robust price structure.
Furthermore, the stock has demonstrated effective mean reversion, with minor dips being consistently followed by bounces from the 20-week exponential average. This pattern confirms the bullish trend in the stock.
Going ahead we expect the prices to go higher till the level of 630, the Bullish view will be negated if we see prices sustaining below 515 level.
4) TATASTEEL
TATASTEEL price structure is robust stock was in clean uptrend from April 2020 till August 2021 thereafter stock underwent in base formation now the stock is near to its life highs verge breaking out the base to continue its upward trajectory.
The stock is currently trading above its key moving averages (50 & 20 weeks EMA) confirms the uptrend.
RSI plotted on the weekly timeframe is rising and have sustained above 60 mark which reflects the rising momentum of the underlying trend.
Going ahead we expect the prices to go higher till the level of 166, the Bullish view will be negated if we see prices sustaining below 130 level.
5) NATIONALUM
NATIONALUM is in a clear Higher High, Higher Low formation which indicates that the stock is in its uptrend formation.
The stock is currently trading above its key moving averages (50& 20 weeks EMA) which confirms the uptrend.
The momentum indicator RSI on the weekly timeframe is moving in sync with the price trend reflecting presence of momentum for the up move.
The ratio charts against the NIFTY have shown a breakout which points towards the out performance of the stock.
Going ahead we expect the prices to go higher till the level of 185, the Bullish view will be negated if we see prices sustaining below 150 level.
Previous Recommendations & Performances (Reco Date: 06-Jan-2023)
Concluding Thoughts
The Nifty Metal Index serves as a vital barometer of the performance of metal-related companies within the Indian stock market. Despite the challenges and uncertainties faced by the metal sector, including fluctuating commodity prices, regulatory changes, and global economic trends, the index continues to provide investors with valuable insights into the dynamics of the industry.
As we navigate the complexities of the metal sector, it is essential to recognize the resilience and potential for growth that these companies possess. With ongoing infrastructure development, increasing urbanization, and the shift towards sustainable technologies, the demand for metals is expected to remain robust in the coming years.
Investors looking to capitalize on opportunities within the metal sector can leverage the insights provided by the Nifty Metal Index to make informed investment decisions. By diversifying their portfolios and focusing on companies with strong fundamentals and growth prospects, investors can position themselves to benefit from the long-term potential of the metal industry.
While the metal sector may face challenges in the short term, the Nifty Metal Index underscores the sector's enduring importance and potential for value creation. By staying informed and proactive, investors can navigate the dynamic landscape of the metal industry and unlock opportunities for wealth creation in the years ahead.
To capitalize on these opportunities, investors can take proactive steps such as opening a Demat and Trading Account to start investing in metal-related stocks seamlessly, and enhancing accessibility and convenience by downloading the Mobile Trading App for real-time market updates and trading on the go.
Additionally, for those seeking specific investment avenues, exploring the 5 best stocks to invest in India for short term in 2024 and the 5 best stocks to invest in India for long term can offer valuable insights. By aligning investment strategies with insights from the Nifty Metal Index and leveraging these CTAs, investors can navigate the metal sector effectively and potentially unlock significant returns in the dynamic landscape of the Indian stock market.
Before investing, don't forget to read the disclaimer—it's a small step that can save you from big surprises!
