The Hindu Business Line : Metal stocks surge on Budget expectations

Mumbai, Feb. 21 Budget expectations have led to an upsurge in the prices of metal stocks on Thursday. The BSE Metal index was up 605 points, which is 3.83 per cent, on Thursday, a 5.23 per cent increase from last week.

Hindalco (7.22 per cent) and National Aluminium Company Ltd (6.73 per cent) were among the top gainers of the day.

Other scrips that did well on the bourses on Thursday include Tata Steel, which was up 4.33 per cent, Steel Authority of India Ltd surged 5.63 per cent, and Gujarat NRE Coke Ltd, which touched its 52-week high of Rs.169.95, was up 7.72 per cent.

An analyst with a research firm explained that Gujarat NRE has been seeing a run up in its share price due to the rise in the price of coke.

“Gujarat NRE Coke is the largest non-captive manufacturer of met coke with an annual capacity of one million tonnes. A rise in global steel production has led to an increase in the demand for coke, which has driven up the prices to an all-time high. This rise in the price is beneficial for the company, which is why we are seeing the recent rally in the stock price of Gujarat NRE,” he said.

Positive buzz

Market men expect this year’s Budget to be positive for the metal sector as the buzz in the market is that the Government would take initiatives in favour of the sector.

A hike in export duty is what most steel manufacturers are hoping for. Export of iron ore has been on the rise in the country due to which steel manufactures have sought higher export duty on iron ore.

Export tax talks

“In last year’s Budget, the Government had revised the export duty upwards; this year too there are talks that the Government might increase it again. By increasing the duty, the export of iron ore — which have risen a whopping nine per cent in the last six months — could be discouraged,” said a metal analyst with a brokerage.

He also added that an increase in export duty would especially be beneficial for integrated steel producers.

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