Long & Short of Markets: Will steel stocks have a dream run this month?

Long & Short of Markets: Will steel stocks have a dream run this month?


As Wall Street legend Peter Lynch had once said: “You can’t go to sleep holding cyclical stocks for a decade and expect to be richly rewarded”, the question now is how long will the commodities boom last and in which pockets. Are we really at the start of a new supercycle that’s going to last for few years? In this weekend’s edition of ‘Long & Short of Markets’, read on the bright outlook for metals such as steel, the impact of Biden’s $2.3 trillion infra plan on commodity stocks and more.

Tech set to gobble up market cap share

Gopal Srinivasan, CMD, TVS Capital Funds, argues that the availability of domestic capital, and not foreign capital, will drive investments in tech companies. In this interview, he adds that with a growing interest rate and inflation, startups will have to generate cash flows as cash is very important for the next 2-3 years. Read here for more on why tech sector’s market cap is going to surge from 2-3% to 25-30%.
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Steely resistance to sell-off
Steel stocks stood the test of bad weather on Dalal Street as the pack outperformed bluechip indices in March. Analysts at Morgan Stanley concur as they believe that the cycle of higher price will last longer. With steel companies seeing improved profitability, the stocks are having a dream run. Here’s more.
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Biden’s polish for metals
US President Joe Biden’s $2.3 trillion infrastructure push just polished the outlook for commodities. The infrastructure spending in the US could compliment the strong demand emerging from China, which has been supporting global commodity markets during the pandemic year. Indian government’s large capital expenditure is just adding more fuel to this rally in metal complexes.
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Supply disruption: A blessing in disguise
Commodities businesses saw a dip in their earnings in the last one decade due to a demand supply mismatch where oversupply dimmed profitability for these businesses, says Kenneth Andrade of Old Bridge Capital. In this interview, he says that with supply disruption in the commodity space and with this transfer of profitability in the cycle takes place. Read more on the commodities space.
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Demand push for recovery
A significant revival in demand in industrial and consumer stocks can be expected as India may see one of the sharpest earnings growths, says Pankaj Murarka. The money manager opined in the interview that, outlook on the bull market still remains strong and resilient. Read here for more on the triggers that could take this bull run higher.
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