Date:04/10/2008 URL: http://www.thehindubusinessline.com/2008/10/04/stories/2008100452201500.htm

Back Metal stocks soften after correction in London

BSE Metal registers highest fall among sectoral indices.

Our Bureau

Mumbai, Oct. 3 Metal stocks fell sharply on Friday on the back of softening global base metal prices. Redemption pressures on the FIIs also impacted the price of the large cap metal stocks.

The BSE Metal index fell by 7 per cent, registering the highest fall among all the sectoral indices on the exchange.

“Base metal prices have corrected on the London Metal Exchange due to overall slowdown and speculation that metal prices had already peaked,” said Mr Pawan Burde, Metal Analyst, Angel Broking.

“Steel prices have corrected sharply by 20-25 per cent in the last two months led by seasonal slowdown, low Chinese demand on closure of industrial activities during Olympics, and demand concerns due to the ongoing financial crisis,” said a research report prepared by Antique Finance Ltd.

There is slackening global demand; Japan, one of the major importers, is facing a slowdown, said another analyst.

“Basically the selling in the large cap metal stocks is liquidity driven as there is redemption pressure on the FIIs,” said Mr Burde.

Tata Steel’s share price was down by more than 10 per cent at Rs 393.80 from its previous close of Rs 438.65.

Commenting on Tata Steel’s share price movement, Mr Burde said: “Since Tata Steel has higher global exposure, the fall in global steel prices has impacted the stock price. The fall is not fundamentally driven but is more liquidity driven, as nothing fundamentally can change in one day.”

The other large cap steel stocks that were sharply down were SAIL (7.09 per cent), Jindal Steel (11.37 per cent), Ispat Industries (4.51 per cent) and JSW Steel (9.68 per cent).

Non-ferrous metal stocks too witnessed a steep fall: Sterlite Industries fell 7.84 per cent, NALCO 5.52 per cent and Hindustan Zinc 6.91 per cent.

Hindalco Industries closed 0.86 per cent lower at Rs 97.70, the company has fixed Rs 96 as the rights issue price for shares of Re 1 face value. Hindalco is raising Rs 5,047 crore through the rights issue that closes on October 10.