InvestorQ : Why did metal stock rally falter so badly in the last couple of weeks?
Aashna Tripathi made post

Why did metal stock rally falter so badly in the last couple of weeks?

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Mahima Roy answered.
2 weeks ago
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You are right that metal stocks have seen a sharp correction and the reason could be largely demand driven. But first let us look at the extent of the rally. If you look at any of the steel stock in 2021 the rally has been crazy, to say the list. Stocks like Tata Steel, JSW Steel, Hindalco have all rallied 3-4 times. The rally met its first match after Credit Suisse underlined the concern that Indian metal stocks may be steeply priced. It had bought metals in Dec-20.

For starters, the resurgence of COVID-19 has been the most obvious dampener from a short term perspective. Just as demand for oil has dampened due to resurgence of COVID, so also Credit Suisse expects similar outcomes in the case of industrial metals too. The pace of industrial recovery is likely to be slower as the resurgence hits supply chains. It looks like analysts and investors may have overestimated the recovery in metal stocks post COVID.

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