Shares of metal companies soared on Monday amid higher prices of base metals globally. The recent rally in base metal prices has come as a boon for metal companies.

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An uptick in metal prices will push realisations higher and inturn improve the profitability of metal companies.

“This current rally in metal stocks is on the back of last week’s price hikes, ranging from Rs 2,000 to Rs 3,000,” said Sahil Sanghvi at Monarch Networth Capital.

These price hikes are due to restocking demand for HRC(for white goods and autos), Rebar (from construction activities with the end of monsoon) and increase in coal prices that are used as raw materials, Sanghvi said.

All-time high metal prices have not only sustained since the past few months but have also scaled previous highs, he added.

Credit Suisse highlighted that aluminium and zinc prices have risen 19 percent and 29 percent from 2Q of FY21 average. The brokerage has increased its aluminium and zinc LME price forecasts too.

The foreign brokerage has upgraded its rating on shares of Vedanta to ‘outperform’ from ‘neutral’ and has also raised its target price to Rs 420 from Rs 285.

Nifty Metal was up nearly 4 percent with Vedanta, Hindalco Industries, Tata Steel, JSW Steel and Hindustan Zinc driving the gains.

Besides, aluminium major Alcoa Corporation reported its highest quarterly net income and earnings per share and continued to capture benefits from strong aluminum pricing. This also gave a sentimental boost to shares of Vedanta, National Aluminium Co (NALCO) and Hindalco Industries.

Meanwhile, marquee investor Rakesh Jhunjhunwala bought NALCO’s shares during the September quarter which also supported the buying sentiment.

According to the shareholding pattern on BSE, Rakesh Jhunjhunwala’s stake in NALCO stood at 1.36 percent stake at September end. The data showed Jhunjhunwala did not own the company’s shares at the end of June quarter.

Vedanta and NALCO hit their 52-week highs while Hindalco Industries and Hindustan Zinc logged their all-time highs today.

Shares of Vedanta, NALCO, Hindalco Industries, Hindustan Zinc, Tata Steel, JSW Steel, NMDC, Steel Authority of India, and Hindustan Zinc were trading percent nearly 3-12 higher today.

Some analysts believe there is still some steam left in the metal stocks.

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(Edited by : Anshul)