The Nifty Metal Index closed down 6.43% today.
Why did this happen?
It was a series of news items that caused it to fall. First up was the news that the US Fed Reserve would start tapering their bond purchases reducing liquidity in the system.
This caused investors to move to safer investments. Commodities across the world fell but metal fell harder because it had run up so much. The US dollar is moving up and that will put pressure on other asset classes including commodities. Even oil has fallen to below $64 levels.
The second reason is because of China’s production cuts. Two days back, mining giant BHP had put out a note on the economy and commodity where it warned, "the increasing likelihood of stern cuts to steel output in China in the current half year … is testing the bullish resolve of the futures markets".
"Prices have decreased materially in late July and early August, but they remain extremely high relative to history at around US$160/t at the time of writing," BHP said.
#nmdc Fell 9.94%
#Vedanta Lost 9.89%
#TATASTEEL Lost 8.85%
#SAIL Closed 8.68% lower
#JindalStel Lost 8.06%
#JSW Steel Ltd Lost Almost 8%
While #HINDALCO Closed Almost 6% Lower
Today...
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