Credit Suisse has downgraded its stance on the sector to “underweight” because it said the rise in global steel prices could have run its course. Global brokerage firms have highlighted new key risks, including mitigating supply chain shocks, weakening demand in China, and China’s efforts to curb speculation on Chinese commodity prices.
Earlier this month, securities firm CGS-CIMB emphasized that tight supply, which contributed to the rise in global steel prices, could recede as production recovers in another few months. Called the rise in steel stocks “irrational enthusiasm.”
Investors are turning some funds out of steel stocks that are attracting a sharp influx of domestic institutional and retail investors, as one of the biggest outperformers of the year is expected to be less bullish, analysts said. There is a high possibility that it will be done.
Investment Trust Allocation Metal stock It rose from 2.1% at the end of January to a 29-month high of 3.2% in April, which could be vulnerable to some reversals.
That said, the rotation of funds from steel and some other metal stocks can be a blessing for other sectors. Credit Suisse has suggested that end-user industries such as the paint and cement sectors should benefit as the prices of key inputs such as steel and chemicals fall.
Credit Suisse UltraTech cement A model portfolio that reflects the beliefs behind the top call for global mid-range products.
Another sector that may benefit from the rotation of funds is banks. Since then, this sector has been well below the benchmark index. Nifty Bank The beginning of the second COVID-19 wave raised concerns about asset quality, hitting a record high in February.
Bank packs have skyrocketed in recent weeks, compensating for lost evidence in March quarter earnings and commentary on major private lenders.
Concerns about asset quality issues that may arise from the ongoing blockade have been alleviated.
Securities firm ICICI direct believes it is only a matter of time before Nifty Bank’s index surpasses its lifetime high of 37,708 points and soars to 38,600 points in the September quarter. Mutual funds that cut their private bank allocations between January and April may see the opportunity to generate strong returns if the recovery in bank stocks gains momentum.
Three sectors could benefit from fund rotation, as Credit Suisse calls the top of steel stocks
https://economictimes.indiatimes.com/markets/stocks/news/as-credit-suisse-calls-top-on-steel-stocks-three-sectors-may-gain-from-fund-rotation/articleshow/82969614.cms Three sectors could benefit from fund rotation, as Credit Suisse calls the top of steel stocks