Shares of metal companies like Vedants, National Aluminium (NALCO) and Tata Steel among others rallied up to 5.3% on BSE today as China's central bank announced broad monetary stimulus and property market support measures to revive the economy.
Shares of NALCO surged the highest, ie, 5% to day's high of Rs 189.85, NMDC's shares increased by 4.5% to Rs 225.45 while those of SAIL gained 3% to Rs to 133.60.

Other metal stocks like JSW Steel, Tata steel, Jindal Steel, Vedanta, Hindalco and Hindustan Copper rose between 2-2.8%.

The world's second-largest economy is the largest consumer of metals and moves to spur economic activity are seen as a positive for commodities and the news of China slashing interest rates on outstanding mortgages to boost consumption has led to an uptick in metal stocks

The China Central Bank Governor Pan Gongsheng on Tuesday announced plans to lower borrowing costs and inject more liquidity into the economy while also announcing that the reserve requirement ratios (RRR), the percentage of cash banks are required to hold as reserves, will be cut by 50 basis points (bps), in the near future.

Depending on the market liquidity situation later this year, the RRR may be further lowered by 0.25-0.5 percentage points, Pan said.

The People's Bank of China is set to further ease monetary policy, lowering its new benchmark, the seven-day repo rate, by 0.2% points to 1.5%. Additionally, the medium-term lending facility rate will see a reduction of approximately 30 basis points, while loan prime rates will decrease by 20-25 bps.

However, Pan did not provide a specific timeline for when these changes will take effect, leaving markets anticipating the implementation.

The Chinese policy adjustments follow the U.S. Federal Reserve's substantial rate cut last week, a move that many analysts believe gives the People's Bank of China (PBOC) greater flexibility to ease monetary conditions. This approach allows China to stimulate its economy while minimizing downward pressure on the yuan, as global monetary dynamics shift in response to the Fed’s actions.

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Published-Sep 24, 2024, 10:21:00 AM IST