We see that metal shares will hit a new low in light of likely mining bill to be passed by the cabinet as coal miners will have to share a maximum 26% of their profits with local communities and for other miners an amount equivalent to royalties and it will eat into their profits. The companies likely to be affected are Coal India, Sterlite, Tata Steel, SAIL, Jindal Steel and Hindalco.
Thus as a strategy one can short the metal stocks before the passing of the mining bill as it may be in the interest of the local population, but same is not in the interest of the metal companies and they are likely to hit new 52 week lows in the market.
Out of all the pack Coal India is the ideal bet as it is Navratna company and one can enter in this stock at lower levels as a systematic plan with a time avenue of 5 –10 years and it can definitely finance your children education as in times to come education is going to be very expensive.
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