Mining Sector Analysis For Long Term Investment

Mining Sector Analysis For Long Term Investment

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The Indian economy is in good shape and is one of the fastest growing economies in the world. With a good environment created for macroeconomic growth, there is no reason why investors should not be optimistic for the near term while investing in the minerals and mining sector stocks.

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Mining Sector Analysis For Long Term Investment

 

Factors Affecting The Mining Sector

Government Reforms
Introduction of the GST can be seen as a boon for the mining sector. About 81 percent of the items have been taxed at less than 18 percent. The rate under GST for capital goods and industrial intermediate items in 18 per cent. Thus, expect mining sector stocks to zoom ahead once GST comes into play. The government has taken various measures to reduce imports, thus aiding domestic steel companies. By introducing the National Steel Policy, the government aims to increase domestic production to 300 million tons by 2030. With a focus on renewable energy and infrastructure, the metal consumption is expected to increase in the near future.

Global Factors
Metal prices have recovered in the past 10-12 months. Some supply constraints and the increase in demand from China has kept the outlook positive for the sector. Steel prices have recovered by a huge 54 percent. Appreciation of the rupee could be the only spoilsport for the mining sector.Thus, domestic policy decisions along with increasing prices due to global factors are helping improve the growth story of the mining sector.

 

Stock Picks in the Mining Sector

Let us take a look at some stocks in the mining sector, where value investors can park their money for the long term:

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