Steel Stocks Outlook: Seen dn next wk amid gloomy market scenario
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suguhopes
Jul 12, 2008, 3:22:59 AM7/12/08
to Kences1
NEW DELHI - Surging crude, commodity and food prices, rising
inflation,political uncertainty and government controls on the steel
sector are likely to keep share prices of steel companies depressed
next week.
Global crude oil prices rose to $146.90 a barrel today, their highest
level ever.
The headline inflation scaled to a new 13-year-high of 11.89% for the
week ended Jun 28 from 11.63% in the previous week, the commerce and
industry ministry said today. This is the highest inflation rate since
the new WPI series was introduced in 1994.
The inflation rate was 4.42% a year ago.
The rise in inflation rate was mainly on account of increase in prices
of
primary articles and manufactured products. In primary articles,
prices of vegetables rose 3.7% on week.
In the week to Jun 28, index for all commodities rose 0.4% to 238.1
from 237.1 a week earlier. The all commodities index had risen 0.2% on
week to 212.8 in the corresponding week last year.
Steel shares outperformed the benchmark indices, the BSE Sensex and
the NSE Nifty, in the week gone by. Frontline steel shares rose by
4.0-8.0% while the indices rose by less than 1%.
Political uncertainty over the survival of the Congress-led United
Progressive Alliance government is expected to dampen the stock
market. The government is expected to seek a trust vote on Jul 22 in
the Lower House of the Parliament.
In its effort to fight inflation, the government has taken several
measures across sectors including cutting import duty, imposing export
duty and forcing manufacturers to cap prices. The steel sector has
been among the biggest victims of these measures.
In the first week of July, pipe manufacturers announced a 10% cut in
prices and primary steel producers agreed to lower exports to boost
domestic supplies. In the same week, Steel Secretary R.S. Pandey said
steel exports in Apr-Jun stood at 0.9 mln tn, compared with 1.3 mln tn
in the year-ago period.
Steel exports have declined after government threatened to levy export
duty or ban exports in a bid to augment domestic supplies and lower
prices.
Early May, government had impressed upon primary steel producers to
hold their price line for three months. On Jul 4, the companies said
they may extend the price freeze beyond July, if required.
Steel Authority of India Ltd. will detail its June quarter results Jul
21
while JSW Steel will do the same on Jul 31.
Week-on-week closing prices of key steel companies' shares, in rupees,
on National Stock Exchange:
Company Closing Level Closing Level % Change
Jul 11 Jun 4
Steel Authority 136.30 127.85 6.6
Tata Steel 666.05 640.40 4.0
JSW Steel 800.95 752.85 6.3
Jindal Steel & Power 1,808.00 1,686.25 7.2
Nifty 4049.00 4016.00 0.8
Sensex 13469.85 13454.00 0.1
N.Sukumar
Research Analyst
inflation,political uncertainty and government controls on the steel
sector are likely to keep share prices of steel companies depressed
next week.
Global crude oil prices rose to $146.90 a barrel today, their highest
level ever.
The headline inflation scaled to a new 13-year-high of 11.89% for the
week ended Jun 28 from 11.63% in the previous week, the commerce and
industry ministry said today. This is the highest inflation rate since
the new WPI series was introduced in 1994.
The inflation rate was 4.42% a year ago.
The rise in inflation rate was mainly on account of increase in prices
of
primary articles and manufactured products. In primary articles,
prices of vegetables rose 3.7% on week.
In the week to Jun 28, index for all commodities rose 0.4% to 238.1
from 237.1 a week earlier. The all commodities index had risen 0.2% on
week to 212.8 in the corresponding week last year.
Steel shares outperformed the benchmark indices, the BSE Sensex and
the NSE Nifty, in the week gone by. Frontline steel shares rose by
4.0-8.0% while the indices rose by less than 1%.
Political uncertainty over the survival of the Congress-led United
Progressive Alliance government is expected to dampen the stock
market. The government is expected to seek a trust vote on Jul 22 in
the Lower House of the Parliament.
In its effort to fight inflation, the government has taken several
measures across sectors including cutting import duty, imposing export
duty and forcing manufacturers to cap prices. The steel sector has
been among the biggest victims of these measures.
In the first week of July, pipe manufacturers announced a 10% cut in
prices and primary steel producers agreed to lower exports to boost
domestic supplies. In the same week, Steel Secretary R.S. Pandey said
steel exports in Apr-Jun stood at 0.9 mln tn, compared with 1.3 mln tn
in the year-ago period.
Steel exports have declined after government threatened to levy export
duty or ban exports in a bid to augment domestic supplies and lower
prices.
Early May, government had impressed upon primary steel producers to
hold their price line for three months. On Jul 4, the companies said
they may extend the price freeze beyond July, if required.
Steel Authority of India Ltd. will detail its June quarter results Jul
21
while JSW Steel will do the same on Jul 31.
Week-on-week closing prices of key steel companies' shares, in rupees,
on National Stock Exchange:
Company Closing Level Closing Level % Change
Jul 11 Jun 4
Steel Authority 136.30 127.85 6.6
Tata Steel 666.05 640.40 4.0
JSW Steel 800.95 752.85 6.3
Jindal Steel & Power 1,808.00 1,686.25 7.2
Nifty 4049.00 4016.00 0.8
Sensex 13469.85 13454.00 0.1
N.Sukumar
Research Analyst
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