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Sharvari Patwa

Mumbai, Aug. 5 Metal stocks had a weak run on Tuesday on negative news both on the global and domestic fronts. While the Sensex rose 2.63 per cent, BSE-Metal ended the day in the red, falling by 1.91 per cent. According to analysts, metal stocks declined today as base metal prices were down substantially on London Metal Exchange, which is considered the barometer for metal stocks.

Sterlite Industries fell 6.76 per cent, Sesa Goa (5.95 per cent), Gujarat NRE Coke (5.93 per cent), JSW Steel (3.92 per cent), and Tata Steel lost 2.28 per cent.

There was a run up in metal stocks in the past couple of days, and they have been very volatile due to the Government’s uncertain stance on steel prices, said Mr Pawan Burde, Analyst, Angel Broking Ltd. Metal stocks dipped as there were reports suggesting the Government might control iron-ore prices to restrain steel prices, said marketmen.

The Government is putting pressure on steel companies to cap their prices at lower levels, said analysts. Further, the Government is also suggesting a price band for steel companies, which will also be a negative for them, they said.

While Sterlite Industries was down 1.74 per cent over the week, Tata Steel was up 15.69 per cent, Sesa Goa by 3.21 per cent, Gujarat NRE Coke by 0.19 per cent, and JSW Steel 14.59 per cent over the same period. There was also profit booking in metal stocks after they had gained substantially in the past few days, said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets Ltd.

“To some extent, metal in addition to commodities and crude is bitten because of a strong dollar the world over,” said Mr Ajay Parmar, Head of Research, Emkay Global Financial Services.

An Angel Broking report says: “Steel prices are on their way up globally due to the strong demand from the emerging markets such as China and India and rising input costs of iron ore and coking coal. Tight supply of these steel-making raw materials has resulted in an unprecedented rise in steel prices. The global prices have risen by almost 50 per cent this year and are expected to remain firm in the medium term. However, the domestic steel players have taken a hit on their margins due to rising input costs as they have not been able to pass on the same due to Government’s intervention, which has prevented the steel companies from raising prices in the wake of the high inflationary pressure.”

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