Can Nifty Metal help to push the market higher?

In March 2020, the index made a low of 1480 and ever since, the index has been scaling newer highs and its record high stands at 6312.

The Nifty Metal Index is designed to reflect the behaviour and performance of the Metals sector (including mining). The index comprises 15 stocks that are listed on the National Stock Exchange (NSE). The rescheduling of index constituents happens bi-annually every year. Tata Steel holds the highest weightage of about 25% on the index followed by Hindalco Industries, which has about 17 % weightage in the index. In March 2020, the index made a low of 1480 and ever since, the index has been scaling newer highs and its record high stands at 6312. That’s a stupendous rally of about 326.40% in a matter of 19 months.

Nifty Metal performance is unmatchable as it delivered 72% returns YTD as against 23.34% of Nifty. Considering 1-month performance, Nifty metal stands flat while Nifty 50 has recorded negative 4.5% returns. Thus, we see that the Nifty Metal index has outperformed the Nifty in every aspect.

10 stocks of Nifty metals are trading above their 200-DMA while 5 stocks are below their 200-DMA. The Nifty Metal has been consolidating with a little negative bias for the past few days. It has fallen below its 50 and 100-DMA but trades about 20 and 200-DMA. Currently, the index lies at 5602 and is down by about 11.2% from its all-time high. The RSI at 52 indicates that the index still possesses strength. Despite the overall bad sentiment of the market, the index has managed to remain flat when other indices are bleeding. The difference between the index spot and 200-DMA currently stands at 8.04% while in the case of Nifty 50, the difference is 6.22%. This shows that Nifty Metal is trading stronger than the benchmark index.

It is expected that the change in sentiment will trigger the index to fly even higher and thus support Nifty in gaining strength. The metal stocks are on a roll for a few days and can be the prime supporters in pushing the market up.