Metal stocks: If you're thinking of investing in metal stocks after the recent rally, it might be best to hold your horses ."The strong ru of the sector is likely coming to an end,"said Rajesh Arora ,founder of Golndiastocks.com.
He expenects metal companies to post strong results for the market has already priced in those expectations ,so the upside to the results is already largely in the share prices."Metal company earnings estimates could be revised downward as commodity prices ease in the coming months .
A Short-Term rally may emerge ahead of Q1 Earnings
Rakesh -arora said that in last few months,metal stocks have corrected by 20-30%. So the sector could get a near-term bounce ahead of the release of strong june -quarter earnings.But he does not see these stocks going back to their previous highs anytime soon
Aluminium Comoanies-the biggest worry
Arora keeps a choice watch on the aluminium sector .He said many brokerages and analysts are still forecasting aluminium priices of around $3200 a tonne but he is more coservative.
Increase middle east and Indonesian supply will help improve globel aluminium availability, which could drive prices down to around $2600 a tonne.If so ,aluminium producers'earnings estimates may need to be lowered, which could put further pressure on thier share prices.
Steel stocks:Although he thinks steel prices have already peaked ,Rakesh Arora anticipates soilid Q1FY27 resukts .Although steel stoxks have excellent domestic production ight put presuure on margins and cause more declines.
What did Rakesh Arora say abouy Vedanta's Iron &steel business?
Vedanta iron & steel : According to rakesh Arora ,the market has alreay priced in the advantages of Vedanta's Iron & steel business expansion ,leaving little room for growth.Although he sees promise in the group's oil and gas industry ,he views it as a high-risk investment because of regulatory uncertainties and the possibility that it may become a value trap.
Investor strategy : Rakesh Arora suggests that instead of starting new positions ,investors should take advantage of may any rebound in metal stocks taht follows impressive Q1 FY27 earnings as a chance to book profits. He does piont out that a persistent decline in the value of the us dooler might boost commodity prices globally and enhance the prospects for base metals.
Disclaimer : This article is for informational purposes only and is not investment advice.
