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Jayanta Mallick

Kolkata , April 29

STOCKS of the local commodity companies, particularly steel, today reacted negatively to the world-wide shock wave that has shaken commodity and stock markets overnight on the news that China was determined to put a break to its overheated economy.

The commodities and commodity stocks, which had been enjoying cyclical upswings largely owing to huge demand from China, yesterday rattled up the markets in the western hemisphere and today in the east.

Jindal Iron & Steel (one of the largest domestic galvanised steel producers and exporter), declined by 4 per cent, while the steel heavyweight Tisco also slipped by 4 per cent. SAIL was down by 3 per cent. The aluminium stocks such as Hindalco, Nalco, Indal and Sterlite were also affected by LME price indications yesterday.

Metal analysts felt that metals other than steel were affected more on the count of sentiment than on fundamentals. "Till a clear picture emerges on the Chinese initiative towards interest rate and investments, the metal markets may remain jittery".

According to Mr Ketan Thacker of Anagram Stockbroking, the primary concern for the market was that China's slowdown would mean lesser exports and price realisation by the commodity manufacturers in steel and aluminium. Other metal manufacturers in zinc and copper also will lose the opportunity.

However, Mr Ramsesh Damani, a BSE member and market analyst, felt that Chinese tremor may prove to be temporary hiccup for the domestic stocks as the domestic demand in steel was seen to rise sharply in the next few years.

He, of course, added that special steel products such as galvanised items might face a problem for some time as the scrap and coke prices, driven by shortages, have been pushing up cost.

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