Latest news with #AjitBanerjee
Mint
9 hours ago
- Business
- Mint
Vedanta to Tata Steel: After volatile H1CY25, Nifty Metal Index may see brighter H2
Stock Market Today: The Nifty Metal Index has been rebounding, having risen almost 5% in a week. After volatile H1CY25, hopes rise on recovery and better H2 led by improving base metal prices and strong demand for ferrous and non-ferrous. This has improved outlook for Vedanta Ltd, Hindalco Industries, Tata Steel, JSW Steel, and other metal stocks. The base metal prices on the London Metal Exchange, or the LME, are rising. Among key factors that are leading to the rise are expectations of a rate cut in the US, leading to a pickup in economic activities. Among others, the geopolitical tensions leading to supply chain disruption and the weakening of the dollar index, or a weaker dollar, are fueling the rise in base metal prices, as per analysts. The progress on trade talks between China and the US further adds to optimism among investors. A pickup in China's demand is looked at in a positive light, with China being the largest consumer of commodities. Meanwhile, geopolitical stress also means higher defence outlays for many regions in the world, and the same means higher consumption of all metals. Even a 12% safeguard duty, imposed by the government recently on certain steel imports for 200 days to protect domestic steel manufacturers from import surges, hence remains positive for domestic manufacturers. The monsoons may impact steel prices in the near term; however, softer input prices may cushion the impact The demand in India is rising, led by strong domestic growth. The infrastructure activities keep the demand for metals strong in the country. In addition, even the pickup in defence manufacturing is also aiding growth for metal demand. The metal sector has already started seeing a rally driven by various factors, said Ajit Banerjee, President and Chief Investment Officer, Shriram Life Insurance. The safeguard duty announced by the government has provided a much-needed guardrail sought by the industry, while benign raw material prices have helped in margin protection, which has reflected in the earnings of the companies, as per Banerjee. In view of the trade- and tariff-related talks between China and the US, expected to get concluded favorably to both the nations, will benefit the Indian metal sector significantly, pointed out Banerjee. Apart from this, a pickup in the government and private sector capex in this financial year augurs well for the metal sector. With the fears of global recession receding and trade negotiations between the US and its major trading nations ending on a positive tone, it will bode well for the metal sector of India, said Banerjee. The demand scenario for non-ferrous metals is expected to improve with declining LME warehouse stocks, higher defense outlays in Europe, and a recovery in the Chinese economy, said Antique Stock Broking. Steady crude derivatives, weaker caustic soda prices, and stable thermal coal costs will aid Indian non-ferrous companies, as per Antique. Goldman Sachs has upgraded their 2H 2025 copper price forecast to $9,890 per ton from $9,140 previously, meaning that they expect the prices on the London Metal Exchange (LME) to continue rising. Over the next two months, Goldman Sachs expects LME copper prices to rise, peaking for the year at $10,050 in August, before falling. The increase in outlook has been led by the ongoing US Section 232 copper investigation. This, as per Goldman Sachs, has continued to cause significant dislocation between LME (UK) and COMEX (US) copper prices. Significant over-imports of copper into the US have caused fears of a shortage in the rest of the world, despite the global market being in surplus, and have resulted in a blow-out in LME time spreads. Analysts at Antique Stock Broking said that "spot non-ferrous metal prices (except zinc) have strengthened 1%–5%. Month on month (as well as on a six-month and year-on-year basis) amidst the ongoing tensions in the Middle East as fears of supply chain disruption, lower LME inventory levels, and a weaker dollar index aided sentiment. The Dollar Index has weakened 1% to 2% over the past three months to the current level of close to 98. Antique maintains a buy rating on Hindalco and National Aluminium Company (NALCO) and hold ratings on Vedanta and Hindustan Zinc. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Economic Times
07-05-2025
- Business
- Economic Times
Is gold the new growth asset? 3 reasons why yellow metal rose 28% in 4 months: Ajit Banerjee
In this edition of ETMarkets Smart Talk, we spoke with Ajit Banerjee, President and Chief Investment Officer at Shriram Life Insurance, to decode the remarkable rally in gold. With prices surging nearly 28% in just four months, gold is no longer seen as just a safe haven—it's emerging as a serious growth asset. Ajit breaks down the three key factors fueling this surge, including aggressive central bank buying, global macroeconomic uncertainty, and inflationary fears. He also shares insights on asset allocation strategies in a low-interest-rate environment, market volatility, and where investors can find long-term value in today's turbulent times. Edited Excerpts - ADVERTISEMENT We are seeing some volatile swings in the markets, thanks to the back-and-forth from Trump on tariffs and now some geopolitical concerns amid tensions between India and Pakistan. How are you looking at all this?A) We are all aware markets do not like uncertainty of any type, and by nature, it is forward-looking. Hence, it reacts either positively or negatively depending upon the underlying developments. Presently, most of the countries are grappling with the tariff turmoil and the perceived negative impact on its economic growth once the temporary pause is over. There is too much uncertainty and confusion emanating from the tariff announcements followed by roll backs, then pause, which is adding to these is better placed relative to many countries primarily for the following reasons: ADVERTISEMENT 1) The initial tariffs announced upon India on 2nd April at 26% was comparatively lower than many other countries, even though it wasn't the lowest.2) The domestic market is large enough to consume a substantial part of good and services produced in the country, so the impact of external shocks gets moderated to a great extent. ADVERTISEMENT 3) India contributes 2.7% of the US imports, 18% of its exports (2.2% of GDP) depend on US demand, posing a moderate risk despite lower direct exposure4) India is also in advance stages of bilateral talks with the US, which is expected to create a win-win situation for both the countries ADVERTISEMENT 5) India remains the fastest growing major economy even after the recent downward revision by the IMF and other agencies to 6.2% GDP growth.6) The recent geo-political escalation between India and Pakistan is certainly a disturbing news as any form of war isn't desirable. However, the market seems to discount any significant impact of this potential risk at this point of time.7) USD has weakened significantly, and inflation levels are going up, so there's a possibility of a stagflation happening as US and US stock markets aren't attractive now ADVERTISEMENT Keeping all the above into consideration, we are seeing positive signals for the time being, which is leading to FIIs, DII, and retail investors again said that, we need to be very vigilant as we need to see what is finally coming out after the 3-month pause gets over. Q) It looks like we have entered a low-interest-rate environment. What should the asset allocation strategy be for an individual in the age bracket of 30–40 years? A) With the commencement of a rate cut cycle in Feb'25 by the RBI and subsequent announcement of change of stance to accommodative by the MPC, it can be construed that we have entered into a low-interest rate age of the investor is an important determinant in planning the portfolio construction of an individual, one also needs to consider the existing financial commitments, obligations, and priorities before deciding on an asset allocation that the individual has a corpus for investments, then he may perhaps allocate his portfolio in the proportion of 60:30:10 (Equity: Fixed Income: Commodities). Again, there are a host of options available within these which should be planned along with a professional portfolio advisor. Q) What is your take on the results that have come out from India Inc., and what are your expectations for the next few quarters? A) Getting into the results season of Q4FY25, the street expectations were quite muted both on the earnings and on the revenue side, even though in Q4 some green shoots started coming initial results for the January-March 2025 quarter (Q4FY25) point towards a slowdown in earnings growth for corporate India even after having a benign cost environment that has led to an improvement in results demonstrate divergence within the major sector as far as the performance is concerned. In view of the initial deadline of April 2nd for the onset of tariffs in the US, a lot of export order shipments were preponed, which also resulted in skewed revenue numbers for export-oriented have seen strong numbers from the pharma sector stocks, especially among contract development and manufacturing companies due to higher orders received from the US and European the results of large IT companies have been muted in line with the market expectations. The management commentaries also haven't been able to evoke optimism to the market and were quite cautious in view of the prevailing uncertainty in the US accompanied with remote chances of discretionary spending taking next year guidance from the management, therefore, has also been in low single digits, thereby making it lesser banking, financial services, and insurance (BFSI) sector saw a sharp slowdown in earnings and revenue in Q4. However, the sector still outperformed expectations despite the companies' combined net sales (or gross interest income) grew by 9.6 per cent Y-o-Y in Q4FY25. Within the BFSI space, the larger private sector banks posted a very balanced growth on all major parameters. Capital goods and manufacturing goods sector are showing encouraging results and commentaries up to this point of time. Q) Gold is back in the limelight as it hit the Rs 1 lakh mark in the physical market. Is it no longer just a safe haven but also a money-making machine? It has been outperforming equities for the past couple of years. A) The sudden spurt in gold prices is a combination of multiple factors. Data points show that it has risen by 28% in last four months.1) The prevailing challenging global macroeconomic backdrop amidst rising recession fears, subdued growth is propelling investors to invest in safe haven assets like gold.2) This persisting rise in gold prices is also attributed largely to some of the central banks of the world—mainly from Asia like China, India, and Turkey—increasing their gold purchases.3) Further, as there is a global concern about the return of inflation, primarily driven by tariffs and supply constraints, people are investing in gold as a hedge against factors are driving the gold prices which is even outperforming equities. Q) How should one be looking at the small- and mid-cap space in FY26? A) We have been seeing that the midcap and smallcap indices have left behind their largecap peers in the recent market pull back in April. Nifty small cap indices have shown a positive movement of 18.4%, Midcap 100 15.9% and Nifty 50 11.9% between April 7 and April has also been seen that generally, when a market pull back happens, the mid and small caps tend to do pull backs are primarily driven by the pause in the tariff announced by the US and comparatively better position of India vis-à-vis its emerging market this point of time there is so much uncertainty that it's very difficult to say about the full-year trend as there are multiple uncertainties which can play investor has to be very vigilant and should focus on domestically focussed mid and small cap stocks and may be better placed if a bottom-up stock picking is done with the intent of longer period of should not go all out only for small and midcap stocks and should have a reasonable component of large cap stocks in their portfolio as well. The mix between large –mid – small should be on the basis of the investor's risk appetite. Q) Where is the value in the market after the recent fall we have seen? A) We can look at the BFSI sector, pharma with CDMO segment, capital goods, discretionary consumption items and specialty chemicals from a longer-term perspective. Q) How are FIIs viewing Indian markets? We have seen some net buying in the past few sessions, but for the month, FIIs have pulled out more than Rs 13,000 crore from the cash segment of Indian equity markets. A) Over the entire FY25, FIIs have remained a big seller. Their main concerns remained the higher valuations and weakening currency vis-à-vis both the parameters are relatively favourable over FY25 and India's growth story is reflecting better compared to its EM peers at this point of time, hence, we are seeing FIIs coming back to from these, it is also perceived that India would be less impacted than China, Vietnam, Indonesia due to the tariff-related turmoil, so the adverse impact on its economy will be lesser. Q) Have you made any changes to your strategy or portfolio to balance out the volatility arising from external factors such as tariffs or geopolitical concerns? A) We are a long-term investor, and we invest as per Asset Allocation matrix and how business mix we are monitoring the markets closely and taking some asset allocation calls depending on markets predominantly invest in Alpha Quality Low volatility stocks largely hovering in the large cap and selective mid cap stock universe. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
