Tisco lost further ground on Thursday, just when the stock was stabilising after a recent slide.
The scrip of the Tata group steel major was down by 1.5% at Rs 134.85 on the BSE in mid-morning trades, slipping from the day's high of Rs 137.90. A modest volume of 480,000 shares was recorded on the counter in two-and-half hours of trading.
Tata Iron & Steel Company stock has witnessed a sustained fall in the last few sessions after the presentation of the Union Budget for 2003-04. From Rs 150.10 on 28 February 2003, the stock plunged by 10% to a low of Rs 135.10 on 10 March 2003. The slide on the counter has come amid volatility with the scrip witnessing intermittent recovery. Besides, the overall weakness in the market due to fears of a US-Iraq war has also affected the Tisco stock. There were reports of huge positions taken in the Tisco stock in the derivatives segment of the bourses. However, soon after one Mumbai-based brokerage (on 5 March 2003) denied rumours that it had taken positions on the Tisco counter, the stock gained 1.6% on that day at Rs 147.10. The rally, however, proved to be short-lived and the stock once again lost ground to hit a low of Rs 135.10 on 10 March 2003.
As per a research note issued on the Asia Pacific steel sector, foreign investment banker Goldman Sachs has said that steel prices in Asia may soon peak-out due to surge in inventory levels, especially in Japan in the month of January 2003. The inventory levels in Korea and Taiwan have also gone up. The rise in inventory levels is despite strong demand from China and Korea. According to Goldman Sachs, the contract pricing of steel may peak in Q2 or Q3 2003 and spot pricing may come down in a couple of months. It has downgraded scrip price targets for some of the Asian steel makers like South Korea's POSCO and China Steel. The brokerage has not covered Tisco in its report.
This may be a cause for concern as it is the strong steel demand from China that has led to a firm trend in international steel and local steel prices.
Also on the flip side, the Union Budget has proved to be favourable for India's steel sector due to its thrust on the infrastructure sectors like railways, airports, seaports and roads with significant increase in plan allocation. This, coupled with significant sops for the automobile and consumer durable sectors is expected to spur demand for steel and thus augurs well for domestic steel manufacturers like Tisco. The company has been raising the share of value added products, which will also see help its financial performance in the coming months.
BSE: 500182
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