Metals pack loses sheen after Credit Suisse downgrade

NEW DELHI: Major metal stocks tanked as much as 4 per cent in early trade on Wednesday after global brokerage Credit Suisse downgraded steel stocks. The brokerage said expectation of elevated domestic iron ore prices would hurt spreads for steel companies. Following the update, BSE Metal Index tanked 2 per cent with all constituents trading in the red.

JSW Steel plunged 4 per cent to Rs 674.10, while Jindal Steel & Power shed 3.5 per cent to Rs 393.30. SAIL dropped 3 per cent to Rs 120.55, followed by Tata Steel, which dropped 1.5% to Rs 1,088.

Other stocks on the pack including National Aluminium, NMDC, Hindalco, Vedanta, Coal India and Hindustan Zinc were down up to two per cent in early trade.


Credit Suisse downgraded Tata Steel and Jindal Steel and Power to 'neutral' from 'outperform' rating and JSW Steel to 'underperform' from 'neutral' rating with a price targets of Rs 1,250 and Rs 450, respectively.

The global brokerage has also reduced the rating for JSW Steel to 'underperform' from 'neutral' and slashed the target price to Rs 550 apiece. However, it has maintained its 'neutral' stance on Steel Authority of India (SAIL) with a target of Rs 140.

The brokerage cut the metals pack as a whole to 'underweight' from 'overweight' and moved to cement. Credit Suisse said it has reversed the 'overweight' on metals, as the price to book value relative to the market stood near 10-year highs.