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Price boost for steel shares

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Crisil Marketwire New Delhi
Last Updated : Jun 14 2013 | 3:50 PM IST
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.
 
Steel companies are expected to announce major hikes in steel prices starting April to cash-in on buoyant demand and rising manufacturing costs.
 
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.
 
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.
 
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.
 
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.
 
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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First Published: Mar 21 2005 | 12:00 AM IST

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