JSW Steel tumbles on Lokayukta report

Our Bureau Mumbai | Updated on July 28, 2011 Published on July 28, 2011


Not expecting further drop in stock prices: Analysts

JSW Steel stock price closed down by 4.9 per cent on Thursday on the back of bribery allegations made in the Lokayukta's final report.

The stock price fell by as much as 7.4 per cent during the day's trading but recovered to end at Rs 819.20 on the BSE, a decline of Rs 42.90 from its previous close.

Bribe for land

The final report by the Karnataka Lokayukta, Mr Santhosh Hegde, claims that one of the associated companies of JSW Steel, South West Mining, had bribed the Karnataka Chief Minister's Mr B.S. Yeddyurappa's children for the purchase of one acre land in Rachenahalli, Bangalore.

“The Government has to expedite the process. A course of action needs to be decided soon so that the iron ore supply for the industry is not affected, yet those doing illegal mining can be brought to book,” commented Mr Seshagiri Rao, Group CFO and Joint MD, JSW Steel, on the issue of illegal mining at the first quarter results conference held here on Tuesday.

Stock analysts, however, are not expecting a further drop in the stock prices.

“The news has been discounted and the stock has already been affected. Steel companies, in general in the short-term are expected to do well due to higher inflation, increasing interest rates leading to lowered government spending on infrastructure projects. The pressure on the steel stocks is likely to continue for the next six-eight months,” said Mr R L Narayanan, Vice President — Equity and Institutional Sales, Bonanza Portfolio.

The JSW steel share touched a day's high of Rs 857.10 and a low of Rs 797.85. The day's low was also the monthly low for the stock.

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Published on July 28, 2011
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