The Hindu Business Line : Steel scrips down on incentive cut fears

Uncertainty over whether the duty neutralisation scheme under DEPB would be dispensed with, saw steel counters such as Tata Steel and Jindal Iron & Steel in a state of flux.

Brokers said the counters came under pressure given the fact that a meeting was held at New Delhi to debate on the issue on Tuesday.

DEPB is a popular scheme for Indian exporters who are reimbursed their import duties and other levies on their inputs for exports.

Analysts reason that given the Government's commitment to contain inflation, one cannot expect it to continue with the incentives at least not at the current rate. Even though a section of the market is convinced that this segment would be untouched by the Government, there are those who believe a duty rate cut to 5-6 per cent from the current 12 per cent for the steel sector.

Their perception being that with DEPB not WTO-compliant and if they need to continue the scheme, the Government will have to bring duty drawbacks. Brokers maintain that if it were to come true, steel counters could come under further pressure.

The stock of Tata Steel ended at Rs 263.85, down 1.47 per cent, with around 21.68 lakh shares traded on the BSE. Jindal Iron & Steel ended lower by 3.40 per cent at Rs 275.40 with around 3.13 lakh shares traded on the BSE.

Leaders stay attractive

FRONTLINE tech stocks such as Infosys, Wipro and Satyam came in for some sustained support on Monday on the bourses. Brokers said that there was significant FII buying interest at the said counters. Additionally, sustained gains on the Nasdaq propelled interest in these counters.

Infosys ended the day at Rs 1697.55, up 1.33 per cent, with around 6.8 lakh shares traded, while Satyam at Rs 389.50, up 2.95 per cent, with around 26.22 lakh shares traded and Wipro at Rs 600.90, up 1.99 per cent, with around 4.76 lakh shares traded on the BSE.

On fund support

The counter of Ranbaxy has been witnessing sustained interest on the bourses in the recent past. While a positive perception on the generic market has been a major driver at this counter, brokers believe that with the mid-cap rally gradually losing steam, people are taking a call to shift into large-caps again. Fund support has also been on the rise.

The talk is that a prominent domestic brokerage has been buying on behalf of its FII client over the last two trading sessions.

The stock ended at Rs 1093.05, up 2.17 per cent, with around 3.62 lakh shares traded on the BSE.

Deeptha Rajkumar

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