While the Street continues to have a negative view on metals as a sector, the impact of the weak rupee is relatively positive for these companies. Analysts expect an upside surprise as export revenues are linked to international prices. Also, domestic prices are based on import-parity basis.
Therefore, realisations would be better. However, a big overhang could the Rs 29,200-crore foreign currency loan exposure of companies in this sector. Only half of this exposure is hedged. Though steel makers would benefit from import parity pricing, a fall in raw material costs would be offset by the rupee's fall.