Metal scrips face the heat

Metal stocks took a beating on Tuesday on the bourses even as international metal prices saw correction on demand worries over the last few weeks.

While the BSE Metal index went down by 2.1 per cent, Hindustan Zinc, National Aluminium and Hindalco figured among the top losers.

Hindustan Zinc fell 6.3 per cent to Rs 327.35, National Aluminium fell by 5.3 per cent to Rs 275.50 and Hindalco slipped by 2.3 per cent to Rs 158.55 on BSE on Tuesday.

"The mood changed due to a variety of factors including profit booking. Copper prices are expected to fall even more and will be in the range of Rs 204-219 per kg," said Jignesh Sanghvi of India Infoline.

He pointed out that despite increased demand from China, a recent report by the Mining Association of UK has pointed about excess copper inventory worldwide.

"Increase in production and tapping of new mines has exceeded demand for the first time since 2002 and this could also have acted as a dampener," he added.

Around two weeks ago, copper prices had reached an all time high of $5,000, but the prices have since fallen due to technical correction.

The US housing sector, one of the biggest markets for aluminium, has been slowing down its consumption, industry analysts said.

Sanghvi also projected a decline in gold prices till the end of the month. "Till February end, gold prices will be in the bearish mode and in the first or second week of March, it may shoot up. By the end of 2006, the gold prices would be $600-642 per troy ounce, and before Diwali it is expected to be in a five digit figure," he said.