Volatility likely, but long-term positivity intact for metals: Geojit's Gaurang Shah

The metals pack has witnessed a strong rally across both precious and base metals, but investors should be prepared for higher volatility even as the long-term outlook stays positive, according to Gaurang Shah, Senior Vice-President at Geojit Financial Services.

"Along with precious metals, we had a decent rally in the metals pack also, whether it is ferrous or non-ferrous. If you are an investor, either in precious metals or in metals, be it the ferrous or the non-ferrous side, you need to have a little bit of elevated risk appetite, given the kind of rally that we've seen in precious metals over the last maybe about one-year plus, and metals in the last maybe about couple of weeks and months," Shah told Business Today on Thursday.

"The undertone for metals pack, ferrous as far as the domestic side is concerned, remains absolutely robust. And there is also a possibility that there will be a further revision on the prices of flat and long products over a longer period of time," he added.

"There is also a tailwind addition that the input cost has gone down, so the profit margins are going to expand. Also, trade agreements with the UK, other nations, with the European Union, and of course, the contours of what has happened between India and the US trade deal will send a positive signal for this particular sector," he also said.

"Focus on the budget as far as infrastructure creation is concerned, which is also well elaborated. So domestic demand is going to look robust. The real estate sector is doing well. There again, you will see positivities. Capex in the private sector picking up will see a positive statement for the metals pack," he stated.

Advising investors to stay invested through near-term swings, Shah stressed the importance of a longer-term view. "So, have a two-year-plus kind of horizon. Don't get carried away by this short-term volatility and take a decision to exit, whether it is precious metals or whether it is ferrous or non-ferrous metals. Long-term positivities remain."

Sharing his preferred picks, Shah said, "We remain positive on Tata Steel, JSW Steel, Jindal Stainless, Hindalco, Vedanta, NMDC and Nalco. These are some of the names on which we are recommending investment with a two-year-plus kind of time horizon."