The Hindu Business Line : Strong demand keeps metal indices high

Mumbai, Oct. 24 The BSE-metal index on Wednesdaysaw an increase of 2.47 per cent, ending the day at 15772.94 on expectation of good quarterly performance of the domestic companies and strong global demands for metals.

A major player in the sector was Tata Steel, which ended the day with a 2.3 per cent increase in share price, closing at Rs 915.40.

Along with Tata Steel, Sesa Goa performed well, closing the day at Rs 3,097.35, which was an increase of 5.42 per cent. SAIL too ended the day 2.92 per cent up, at Rs 243.45.

The reason for Tata Steel and SAIL are doing well, researchers say, is because of their forthcoming quarter results announcements. “Shares of Tata Steel and SAIL are running ahead of their quarter result announcements,” said a metal analyst with a leading brokerage.

Development trigger

Another reason why they seem to be doing well, cite market-watchers, is the fact that the rate of development is sky-rocketing. “I think this is mainly because of strong demand.

There has been a sharp growth in the number of infrastructure projects thanks to the increase in the development of all the sectors.

This is the primary reason,” commented a researcher about the stock prices.

With many infrastructure projects coming up, the demand for metals will be on the rise, thereby pushing up the prices of these stocks.

Companies with their own iron-ore mines seem to benefit the most, say researchers.

“This is because they will not have to push their cost onto the price,” an analyst reasoned. Just like how the Sensex takes cues from the global markets, so do the sectoral indices.

“Globally, the demand for metal has been rising and is quite high.

Since our markets are co-related to the global scene, we will defiantly take cues from it, which we see being reflected in our prices,” said a research analyst.

Outlook promising

Predictions for the index are that the next two years look promising.

Researchers say that due to the visibility of the demand for metal stocks, they foresee good performances by companies in the index.

They also see prices staying firm for some time to come.