Steel shares rallied on Wednesday on market talk that a stiff hike in steel prices was on the cards with effect from February 2003.
The scrip of sector leader Tisco jumped 1.7% to Rs 157.25 in the bargain, rising near the day's high of Rs 157.55. FIIs are picking up the stock of late, according to dealers.
The scrip of public sector steel major Sail proved even firmer, jumping 6.3% to Rs 10.90. The scrip has surged for the second straight day today, after the company said it substantially pruned losses in Q3. Sail notched up solid volumes of 2.11 million shares on BSE in two hours of trading today.
Other steel scrips Jindal Iron and Steel (Jisco) (up 5.7% to Rs 78.65), Essar Steel (up 5% to Rs 9.35), Jindal Vijay Nagar Steel (up 4.5% to Rs 5.70), Ispat Industries (up 4.5% to Rs 5.75) and Jindal Strips (up 5.6% to Rs 152), made strong gains as well.
The rally in steel shares comes amid market talk that a stiff hike in steel prices is forthcoming in February 2003.
Steel shares have been a firm feature of the market over the last few months on the back of a continued hike in prices of both long and flat steel products. Domestic steel prices have been fueled higher by rising international prices of the metal. The sustained hikes have prompted steel makers to come out with upbeat Q3 ended 31 December 2002 results.
In a conference call held on 24 January 2002 , Tisco revealed that it expects steel prices to remain constant or rise marginally in the quarter ended 31 March 2003 . However, volumes will be higher. In view of the current uncertainty in global politics, steel prices are likely to sustain in the next five to six months, Tisco said.
On 11 January 2003, public sector steel major Sail said that prices of some long products were revised upwards by Rs 200 to Rs 400. The base prices of long products were hiked by Rs 200 to Rs 300 earlier (on 1 January 2003). The company also said that due to slackness in demand, it gave discounts on long products in 2001-02. Subsequently, with rise in demand from customers and housing activities, the rebates were adjusted to match the market prices.
For Q3 ended 31 December 2002, Tisco reported a whopping 711% growth in net profit to Rs 280.23 crore (Rs 2.8 billion) on a 28% growth in net sales to Rs 2,140.93 crore (Rs 21.4 billion). On Tuesday, Sail announced that it has pruned its losses in Q3. Sail posted a net loss of Rs 78.75 crore for the third quarter ended 31 December 2002 compared to a net loss of Rs 585.38 crore (Rs 5.85 billion) in the quarter ended 31 December 2001. The total income (net of excise) went up 26% - from Rs 3,533.78 crore (Rs 35.33 billion) in DQ 2001 to Rs 4,473.38 crore (Rs 44.73 billion) for DQ 2002.
Meanwhile, financial institutions and banks recently announced a recast of Rs 20,500 crore (Rs 205 billion) worth of loans taken by three major steel companies - Ispat Industries, Essar Steel and Jindal Vijaynagar Steel.
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