Global blitzkrieg prods metal scrips to new highs

Ferrous and non-ferrous metal stocks in India have been on an upswing, following rising prices in the global markets. The rally is expected to continue for some time, even as opinion is divided on how long the trend will sustain.

The upward movement in copper prices can also be attributed to fears of global supply shortage due to break down of a concentrator in Chile.

Some brokers are of the opinion that metals scrips were not performing in the past and have been late in joining the rally. The increase in international commodity prices is driving the growth in metal scrips.

Jaspreet Singh Arora, an analyst from Angel Broking said, "The rise in metal stocks has been brisk and we do no expect upside from the current levels."

A trader argued, "The present upward sentiment is based on speculation and fund buying, coupled with supply shortage anticipated this year. Without strong fundamentals this sentiment may not survive."

The spiralling zinc prices in the international market have forced galvanised steel producers like Uttam Galva Steel and JSW Steel to increase their prices by Rs 3,500 per tonne and Rs 4,500 per tonne, respectively.

For the week ended March 31, the international aluminum prices have gone up one per cent, copper by five per cent and zinc six per cent.

Domestic copper and zinc producers including Hindustan Copper and Hindustan Zinc have raised their basic selling prices up to seven per cent, effective from 1 April.

On Monday, JSW Steel went up by 4.97 per cent to close at 317.75. In the past one week the stock moved up by 9.12 per cent. Lloyd Steel increased by 11.96 per cent and by 20.57 per cent over the past week.

Essar Steel also went up by 8.69 per cent this week. Raipur Alloys increased by 15.58 per cent on Monday and by 36.45 per cent in the past one week, while Southern Iron & Steel increased by 22.68 per cent.