Key steel stocks are seen outperforming the market over the next one week as companies are expected to effect a price hike for the next financial year 2005-06 that starts on Apr. 1, analysts said Friday. |
"Steel stocks are expected to outperform the market in the short-run, particularly due to announcements on annual steel pricing contracts for next year," said Manish Joshi of domestic brokerage house Sushil Finance. |
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Steel companies are expected to announce major hikes in steel prices starting April to cash-in on buoyant demand and rising manufacturing costs. |
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Analysts see the price of the key ingredient in steel production""iron ore "" rising by over 71 per cent in 2005-06. Iron ore prices rose over 18 per cent in 2004-05. Analysts are rating Tata Steel as a hot favourite among steel stocks. |
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Second-rung stocks attractive: Analysts said second-rung stocks such as Essar Steel and Ispat Industries also look attractive as stocks of top steel makers are trading at high prices. |
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The second-rung stocks are expected to provide investors a bigger room for appreciation. Though analysts said the market had already discounted news about an impending hike in steel prices, the quantum of the hike is still a key factor. |
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In February, major steel producers had held back a price hike under pressure from the government after increasing it by 500 rupees per tonne in January. |
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Besides hopes of a price hike in April, expectation of strong financial performance by steel companies in fourth quarter (Jan-Mar) of current fiscal 2004-05 is aiding sentiment for the sector. |
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