Indian steel stocks recover due to import duty proposal

Indian steel stocks are looking more promising after a government proposal to impose a 12% safeguard duty on all steel imports. This move is expected to increase local prices, which have already risen by over 5% since December. Analysts believe this could lead to positive earnings updates for the steel sector, though the current valuations suggest that much of this good news is already reflected in stock prices. The Nifty Metal Index is currently trading at 14 times its expected earnings for the next year. This is one standard deviation above its historical average, indicating solid investor confidence despite previous struggles in the sector. In other market news, state-run fuel retailers have faced challenges this year due to unregulated selling prices for LPG, resulting in a 400 billion rupee burden. However, lower oil prices are beginning to alleviate some of these pressures, helping companies like BPCL and IOC recover their share values. Meanwhile, air conditioner manufacturers are also seeing strong market performance as consumers prepare for a hot summer. Companies are aggressively supplying products in anticipation of high demand, successfully passing on rising costs to their customers. Overall, while foreign investments in Indian equities have dropped, there is a notable increase in investments in rupee-denominated bonds, with global funds investing $1.8 billion this month. This shift is attributed to expectations of future interest rate cuts in India.