Rs 27,500 crore investor wealth wiped out in 4 days in metal pack

The metal pack is a bundle of nerves these days. Softness in Chinese ores, subdued global demand and the spectre of a full-scale trade war are giving investors the blues.

In fact, the selling in metal counters has intensified of late. So much so that it has wiped off nearly Rs 27,500 crore investor wealth in the just past four trading sessions. Market capitalisation of the BSE Metal pack narrowed to Rs 7.12 lakh crore on March 19, from Rs 7.39 lakh crore on March 13.

All components of the index, barring Nalco, lost up to 9 per cent during March 13-19. Nalco firmed up 5.65 per cent though. Tata Steel burnt its fingers the most, plunging 8.48 per cent, followed by Coal India, JSW Steel, NMDC, SAIL and Vedanta. JSPL and Hindustan Zinc declined over 3 per cent each.

Market capitalisation of Coal India and Vedanta went down Rs 14,308 crore and Rs 4,962 crore, respectively, during the same period. JSW Steel, Hindustan Zinc, Hindalco, NMDC and Steel Authority of India witnessed an erosion of up to Rs 4,800 crore in their market capitalisation in the past four trading sessions.

A subdued demand of base metals is mainly at work. Chinese iron ore slipped to its lowest level on Monday since November 2017 as high inventory levels and a weak domestic steel market weighed on prices. Worries over the potential trade war between the US and China and frustration over US President Donald Trump’s steel and aluminium tariffs too played spoilsport, hurting investor risk appetite.

During an interaction with ETNow, Deepak Jasani, Head, Retail Research, HDFC Securities, said, “The recent reversal in the metal prices has to do with the possibility of trade wars across the globe. In case, it materialises in a big way with all countries trying to put in barriers in terms of import duties or otherwise, then yes, the entire metal pack could go down. It will also result in a global recession kind of a scenario and I do not know whether the developed countries can afford to have a recession at this point of time. But till this fear is out of the way, metals could underperform for some more time and then probably take it forward from there.”

He added: “But given the fact that the economies globally have made some sort of a bottom last year and have started to see faster growth, metals could come back in favour after one or two quarters once this uncertainty is out of the way.”

The BSE Metal index was down 0.35 per cent at 13,503 at around 10.10 am (IST).