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Our Bureau

Mumbai, Oct. 16

Mineral stocks have been breaching all time highs with each passing day. Companies such as Gujarat Mineral Development Corporation Ltd, National Mineral Development Corporation Ltd, Sarda Energy & Minerals Ltd and Sesa Goa Ltd have been registering spectacular gains on the back of growing demand.

With the markets rallying like the way it has been for the past few sessions, analysts say that our markets are going through a super cycle, which may impact all sectors.

One reason for this upward climb of mineral prices, researchers say, is due to the lack of supply of resources while demand remains high. “Commodities are scarce and are fast depleting, but our demand for them has only been increasing. When demand is high and supply is low, it is but obvious that prices will go up. This is what we are seeing with the mineral stocks as of now,” said Mr CA Prashant Bhansali, Director, Mehta Equities.

This could also be the reason why we see these stocks hitting their circuit limits almost everyday but there is very little trading taking place as majority of the stocks are held by the Government.

GMDC today witnessed a trading volume of only 9,840 shares, whereas they recorded their highest ever traded price of Rs 2,239.90.

NMDC as well, only traded 200 shares and their record high price was Rs 8,979.05 and Sesa Goa too traded only 1,54,364 shares but recorded an all time high price of Rs 3,565.

“There is a lot of pent up demand in our economy, which is reflecting in the prices of these stocks,” said a research analyst with a leading brokerage in town.

Companies with coal reserves can be seen as the key beneficiaries due to shortage of coal.

Added an analyst, “With there being a shortage expected in reserves in China, demand for coal has fired up, so coal assets have become pricier because of this depletion.” Some market watchers have said that with the rise in iron ore and coal prices, stocks of these companies have become more lucrative.

“Prices of iron ore and coal etc that have been going up are expected to further go up making mineral companies attractive investment destinations,” said Ms Anitha Gandhi, Head of Institutional Business, Arihant Capital Markets Ltd.

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