Stock Fundamentals

Why is Tata Steel’s stock price deep in the red

Satya Sontanam | Updated on March 01, 2020

Amid massive market sell-off triggered by mounting concerns over coronavirus, the share price of Tata Steel fell about 14 per cent last week.

The drop in share price was in line with the mayhem in the BSE Metal index, which also fell about 14 per cent last week.

Disruption of the supply chain in China, the world’s largest producer and consumer of steel, has rattled investors, who are increasingly worried about the impact the virus might have on steel demand.

However, demand for steel in India is mostly driven by local factors. In fact, many steel players see lower exports from China as an opportunity to step up their presence domestically and globally.

Also, news reports suggest that steel companies in India have raised their steel prices lately, on expectations of higher demand going ahead.

Tata Steel, despite a weak performance in its overseas business, has a decent base in India.

But if the global steel prices fall sharply, a rise in cheap imports from South-East Asian nations could be a threat to Indian players.

Published on March 01, 2020

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