Metal stocks push markets higher

Tue, 6 Jul 09:30 am

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The Indian markets have started today's session on a positive note. The benchmark indices opened below the breakeven mark, but soon moved into the positive territory. They have managed to hold on to their gains since then. Other key Asian markets are in the green with China (up 1.8%) leading the pack of gainers. The US markets remained closed yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading strong with energy and metal majors finding investors' favour. The BSE-Sensex is trading higher by around 62 points, while the NSE-Nifty is up by about 14 points. Buying interest is also being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.4% and 0.5% respectively. The rupee is trading at 46.82 to the US dollar.

Steel stocks have opened the day on a positive note. Gainers here include SAIL and Tata Steel. As per a leading business daily, the current quarter will see an erosion of profitability of steel companies. The gloomy demand scenario will prevent them from hiking rates amid high input cost pressure. This is as per the Joint Plant Committee, a government agency which collates data on the Indian iron and steel industry. It may be noted that steel firms have seen prices coming down by up to Rs 6,000 a tonne to around Rs 27,000 to 33,000 per tonne as construction work slowed down ahead of the monsoon. Now, the demand for long steel products will be especially hit. Long steel products are mainly consumed by construction and infrastructure companies. As a result, companies which produce flat steel products, mainly used in automobiles and consumer durables, may consider hiking rates of some segments.

Energy stocks have opened the day on a positive note. Gainers here include ONGC and Reliance Industries. As per a leading business daily, Reliance Industries' daily crude oil imports fell about 23% in May from April. It was due to a planned shutdown of 100,000 barrels per day (bpd) vacuum gas oil hydrotreater at its older refinery to change a catalyst. The unit is still off-line. The company's two complex refineries at Jamnagar can together process 1.24 m bpd of crude. Compared to April, the company cut the intake of African crude in May by about 40%, while imports of cheaper Middle East grades declined by 16%. Its purchases from Latin America fell 9%. It may be noted that in 2009, it significantly raised imports of light sweet crudes from Africa to benefit from a narrowing price differential between light-sweet and heavy-sour crude grades.