2 main reasons why Nifty Metal sank 7% today

Business

oi-Roshni Agarwal

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The crisis of China’s Evergrande and the US Fed caused an overhang in Indian markets, which trembled and ended 1 percent lower on the Nifty. The volatility index peaked to 14.84.

2 main reasons why Nifty Metal sank 7% today

2 main reasons why Nifty Metal sank 7% today

In the midst of such a chaotic trading day, all but the FMCG back indices ended in the red, with the most shock coming to the metals index, which fell a whopping 6.6 percent, with big losers ahead of the pack being Tata Steel, Jindal. Steel, NALCO, NMDC, JSW Steel, Vedanta and Hindalco all end up with losses between 5-10 percent.

Get to the reasons right now:

1. Gst council meets decision on metals interest rate hike to 18 percent

The 45th GST Council meeting has approved to hike the GST on iron ore and manganese ore. Similarly, the decision was made to approve the increase in GST in nickel, copper and zinc. The rate on metals has been increased from 5 percent to 18 percent.

It is believed that amid a boom in the commodities cycle, metals stocks surged without major correction and the current weakness is expected to last for a few more trading sessions. The cautious opinion is advised by stock market experts.

2. Evergrande crisis in China is another big reason:

There are fears that the current decline in iron prices will continue given the likely bankruptcy of the Chinese real estate giant. Fears that Evergrande’s likely $83.5 million default on its offshore bonds on Wednesday will lead to a decline in commodity demand in Chinese markets, which also happen to be the largest consumer of metals.

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Story first published: Monday, September 20, 2021, 22:26 [IST]

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