Metals sector was the clear winner amid sharp selling seen in other sectoral as well as benchmark indices Tuesday. The Nifty Metal index jumped 2.5 percent while other sectoral indices were down between 0.3 percent and 1.6 percent. The BSE Sensex plunged 358 points intraday.
The rally was in Metal index led by Hindalco Industries, Vedanta, Tata Steel, SAIL, NALCO, Hindustan Zinc and NMDC that surged up to 5 percent.
Better-than-expected Tata Steel's June quarter earnings and strong numbers from Novelis (the subsidiary of Hindalco Industries) also boosted momentum.
Tata Steel reported strong numbers at operational level and as a result profit growth was more than four-fold in the quarter ended June 2017 on year-on-year basis. The stock surged nearly 4 percent.
According to Morgan Stanley, the key positive surprise was higher than expected EBITDA in European operations, while the key negative surprise was weaker than expected performance in domestic operations, which reflected lower than expected steel realisation and weakness in the ferro alloy segment.
Hindalco Industries was biggest gainer with 5 percent rally as its subsidiary Novelis' core EBITDA (adjusted for metal price lag) grew 8 percent YoY, to USD 289 million in June quarter. This was helped by improved product mix, operating efficiency including increased scrap consumption, and gains from currency hedging.
The key positive was improved profitability in North American operations, driven by 13 percent YoY volume growth and a higher share of auto-related shipments in the company's total volumes.
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