The Hindu Business Line : Metal stocks get mauled on profit booking

Mumbai, Dec 17 After rallying for the last few weeks, metal stocks bore the brunt of Monday mayhem selling on BSE. Metal index plunged a whopping 1,438 points or 7.28 per cent. This was the biggest fall among the sectoral indices. In fact, none of the 17-BSE Metal index stocks finished in the green.

JSW Steel fell 13 per cent to Rs 1,163, Jindal Saw 10 per cent to Rs 929, Sterlite Industries 8.45 per cent to Rs 976, Tata Steel 6.15 per cent to Rs 824, Nalco 6.87 per cent to Rs 418 and SAIL 7.20 per cent to Rs 260.

Last week many metal stocks hit their 52-week high. On Thursday, JSW Steel touched Rs 1,390, Jindal Saw Rs 1,089 and SAIL Rs 292. Nalco rose to Rs 467 on Friday, its one year high, while Sterlite Industries reached Rs 1,140 on Dec 6.

“Metal stocks have been rising continuously. With many stocks at their peak, it was the right opportunity for investors to book profit,” said Mr Ashish Poddar, metal analyst, Almondz Global Securities.

Mining stocks

Small and medium metal companies such as Viza Steel, Prakash Industries have also hogged the limelight of late by acquiring lucrative mines. With a booming economy major steel companies have outsourced job work, which in turn has boosted investor interest in them.

SAIL, India’s largest steel producer, has zoomed 270 per cent to Rs 292 on Thursday from its 52-week low of Rs 79 on December 14, 2006. SAIL on Monday announced plans spin off its engineering shops attached to steel making plants as separate profit centres to manufacture medium and small equipment.

SAIL’s engineering shops are now used for making small and medium equipment required for captive consumption.. These shops are already undergoing expansion as the firm’s steel making capacity is set to rise from 15 million tonnes to 26 million tonnes by 2010.

Ruling out any impact of US slowdown on metal companies here, Mr Poddar said: “Though there are talks of US slowdown, it has not been backed up with data. Anyway, Indian companies are banking on domestic demand.”