Mining and Metals

Index : 1,226 | 1Yr : -16.96% | 1Mo : +6.36%

Category : Sectoral Trackers

Min Investment : 7,018

Sharpe Volatility Trend

Mining is among the core sectors of India constituting around 10% of the total output of the Industrial sector and 2.5% of India's GDP. India is very rich in natural resources and has over 85 minerals under different groups such as fuel, metallic, non-metallic, atomic and minors. It has large resources of Coal, Petroleum, Natural gas, Limestone, Titanium ore, Bauxite, Manganese, Zinc and Diamonds. It is known for being among the largest producers & exporters of minerals in the world. In 1993, the GOI came launched the National Mineral Policy (NMP) to liberalize the sector and aimed to bring in private investment and technology to make the sector more efficient.

There have been several scams, environmental malpractices, encroaching, illegal mining and corruption which have distorted the industry in the past. Overtime, state and central governments have suspended many mining licenses which have been involved in such practices. The looming risk of license cancellations, uncertainty of mining lease renewals, demand / supply of natural resources and the macro economy are factors which influence the mining sector.

Most importantly there are risks and opportunities in 'substitution of existing natural resources' due new technological developments extreme price movements etc. Companies which are taking prudent steps by diversifying, managing production inventory efficiently and managing debt carefully are likely to do well.

The Steel Industry heavily depends on stable iron ore prices which in turn depend on global infrastructure spending. In terms of demand, India is better off than its global counterparts. Growth in the domestic development of infrastructure will sustain the steel manufacturing sector.

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