Don't be Surprised if Metal Stocks Outshine All Others for a Year

Sep 4, 2020

Apurva Sheth, Editor,Profit Hunter Pro

If there's anything more surprising than the recovery in markets since March, then it's the performance of metal stocks.

In April 2020, I wrote about three sectors which normally do well during a bear market. These are Healthcare, FMCG and IT. All are defensive sectors and tend to outperform during a crisis.

Check out the returns of the major sectoral indices since 23 March 2020. Healthcare stands tallest with gains of 61%. IT is at fourth position with gains of 55% while FMCG is lagging with gains of 23%.

You may have already noticed that metal sector is marked differently from the rest. That's because it's a surprise. Frankly speaking it's hit me hard.

I would have never expected metals to deliver such strong performance. Metals normally lag in a bear market. It usually ends up in the bottom three sectors.

--- Advertisement ---
These 3 Stocks are the Dark Horses of the Stock Market

The mainstream media mostly ignores them.

Mutual funds and hedge funds can't buy them in bulk.

Stock brokers rarely cover them.

These stocks are the dark horses of the stock market.

They only come in limelight after they have rallied by hundreads of even thousands of percent.

Our head of smallcap research, Richa Agarwal, has a knack for identifying such stocks before they begin their rally.

Over the years, she has spotted such stocks which have gone on to offer triple and even quadruple digit gains for investors. (* Past performance is no guarantee of future results)

Today, when the markets are near all-time high... and some investors are thinking of booking profits... Richa has spotted 3 such stocks which are set for a massive rally.

She will reveal the details of these 3 stocks on 28th January at her free online summit.

Click here to sign-up instantly. It's free.

This got me thinking...what did I miss?

I must confess the rally in metals would have been far more obvious if I had looked closely earlier. Anyways better late than never.

The secret behind the rally in metals is nothing else but its greed and fear cycle. I have been sharing with you such greed and fear cycles in stocks, currencies, and even commodities.

Now let's check out the greed and fear cycle in BSE Metal index.

Greed and Fear Cycle in Metal Index


BSE Metal Index is going through a greed and fear cycle since April 2005. One phase lasts for 22 months. Now there isn't any magic behind the number 22. Every security has its own ebb and flow and you must find it.

For metals it's 22 months. For the auto sector its 32 months. For the IT sector its 24 months.

BREAKING: Full Details of the #1 Investment of the Decade...

I have drawn vertical lines at interval of 22 months. I have marked the greed phase in green and fear phases in red. The sector tends to move up on a point to point basis during the greed phase and moves lower during the fear phase.

Let's see how it has performed during various phases over the years and what can happen over the next few months.

The greed phase in metal sector started in April 2005 and ended in January 2007 with gains of 47%.

The sector entered the fear phase and even moved higher. In fact, that was the highest the sector has ever traded at. But these gains evaporated as the markets tumbled in 2008. The sector ended down by 53%.

The next greed phase started right when the sector bottomed out in October 2008 along with the markets. It generated staggering gains of 285% in 22 months.

--- Advertisement ---
Top 3 Stocks for 2020 and Beyond

We've uncovered 3 high-potential tech stocks after years of research.

These 3 cutting edge tech stocks could potentially create a wave of Indian millionaires.

First one is present in the sector which is expected to GROW over 300 times by 2030.

Second one is one of the leading players in Artificial Intelligence technology.

And the third one is involved in putting up a global safety net to save the world from cyber criminals.

These 3 tech stocks have the potential to offer life-changing gains in the long run.

Click here to get the details...

After such a strong performance, you can't expect anything but terrible performance in the fear phase which followed. It was down by 38%.

The returns in next greed phase was subdued at 17%. The sector dropped by 39% in the next fear phase which ended in March 2016.

After six years of subdued performance, metals were up for a ride in the greed phase which began in April 2016. The sector was up by 105% till January 2018.

By now you would know what was likely to follow next. The fear phase arrived, and the sector tumbled 37% in 22 months. The fear phase ended in November 2019 and it's in greed phase since then.

Now greed phase will last till September 2021. This means there is still one year to go. Now If you consider from a point to point basis metal sector is trading lower than where it was when it entered this greed phase.

That's good news because the sector has a lot more ground to cover up in a short span of time.

So, keep your eyes on metal stocks. Solid profit-making opportunities are coming your way.

Stay tuned...

Warm regards,

Apurva Sheth
Senior Research Analyst, Fast Profits Report
Equitymaster Agora Research Private Limited (Research Analyst)

PS: Today you can get access to stock recommendations from our Co-head of research, Rahul Shah, which have the potential to double your income. Get the details here.

Recent Articles

Is the Tata Motors Stock Running Out of Juice? January 25, 2021
Is the valuation for this 5-bagger running ahead of its fundamentals?
How to Invest in Smallcap Stocks in 2021 and Beyond January 22, 2021
Here's why I believe there is a lot more steam is left in the smallcap rally.
Invest in the Multibaggers of 2021 and Beyond January 21, 2021
Our ace stock picker is ready to capitalise on a big growth opportunity.
You Could Be the Best Fund Manager of the Decade January 20, 2021
Turning Rs 1 lakh into Rs 14 lakh is not impossible.

Equitymaster requests your view! Post a comment on "Don't be Surprised if Metal Stocks Outshine All Others for a Year". Click here!

1 Responses to "Don't be Surprised if Metal Stocks Outshine All Others for a Year"


Sep 10, 2020

Very nicely and logically explained.
You could have caught it early.
But nice anyway

Equitymaster requests your view! Post a comment on "Don't be Surprised if Metal Stocks Outshine All Others for a Year". Click here!