While the brokerage remains constructive on the sector over the long term, it expects a short-term correction that could provide better buying opportunities. Among ferrous stocks, JSW Steel remains its top pick, while Hindalco is its preferred non-ferrous name.
Welekar said the strong April-June quarter performance of steel companies could be followed by near-term price pressure. He advised investors to avoid rushing into fresh positions until valuations become more attractive.
“We are now just coming off of a strong quarter four, and the steel prices are now entering a seasonally weak monsoon season, so we may see some tactical short-term correction in most of the Tata Steel.”
Commenting on Jindal Steel & Power‘s operations, Welekar said the pollution-related issues at the company’s Netherlands plant are an ongoing matter and do not change the long-term investment case.
Among major steel companies, Welekar placed JSW Steel at the top, followed by Steel Authority of India Ltd, Hindustan Copper (SAIL), and Tata Steel. He added that SAIL could become a value buying opportunity if the stock corrects further.
Axis Securities is working with a price assumption of around $3,000 per tonne for 2026-27 (FY27) on aluminium, with prices expected to moderate to $2,800-$2,900 per tonne by 2028-29 (FY29). The brokerage believes higher production costs will prevent aluminium prices from falling significantly even if additional supply enters the market.
For copper, Welekar expects prices above $10,000-$11,000 per tonne to remain sustainable, supported by a shortage of copper concentrate. However, he said investors should wait for lower levels before considering Hindalco, despite its positive long-term fundamentals.
Among non-ferrous stocks, Welekar prefers NALCO, followed by Shyam Metalics, while advising caution due to macroeconomic uncertainty and possible changes in the global interest rate environment.
Looking beyond large-cap names, Welekar said companies such as Godawari Power and Ispat and APL Apollo Tubes are expanding capacity and may offer opportunities over time, although Axis Securities does not have formal coverage on them.
Among covered stocks outside the core metal producers, the brokerage continues to recommend APL Apollo Tubes, with a target price of ₹2,250, citing the recent correction in the stock.
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