Steel Stocks Ride High on Hopes of Higher Spending for Infra Push
Steel stocks are in great demand. While Tata Steel hit a two-month high on Wednesday, SAIL, JSW Steel, JSPL have also gained in the last few days. With a new government due to take charge soon, expectations are running high about a pick-up in infrastructure and project activity, both of which are likely to boost steel sales. The mining sector, too, is hoping the courts will offer some directives that will lift it out of its moribund state.
Tata Steel touched .` 454.45 crossing its 52-week high on the BSE during the day on Wednesday, before closing at .` 452.15, up 5.91%. SAIL closed at .` 75, up 6.01%. JSW Steel ended the day at .` 1169.15, up 1.33%. JSW’s top executives were in Japan and unavailable for comment. Jindal Steel & Power (JSPL) was up 6.06% to .` 260.95 while Adhunik Metaliks went up 0.33% to .` 46.15 on the BSE. Sesa Sterlite, a key natural resources player, saw its stock close at .` 197.15, up 2.18%.
“With a new government, we expect investment in infrastructure and power to revive and this is likely to kick-start the economy. As far as coal and iron ore mining issues are concerned, it is expected that the courts will provide some clarity, hopefully by June-July,” said K Rajagopal, CFO, JSPL Group. SAIL chairman CS Verma declined to comment, similar views were echoed by Jayant Acharya, directormarketing, JSW Steel.
“A new government at the Centre is widely expected to provide a big push to infrastructure. An improvement in sentiment is also likely to have a positive impact on consumer durables sector like automobiles,” Acharya told ET recently. Tata Steel is optimistic about prospects for the domestic steel sector, with a senior official saying recently that steel consumption in India is expected to grow 4.5-5% this year to 75 million tonnes. “We expect the economy to kick-start, after the new government takes charge. Fundamentals of the economy remain strong and the need for infrastructure creation is stronger,” said Tata Steel, vice-president (marketing and sales), Peeyush Gupta.
Tata Steel is optimistic about prospects for steel sector as the consumption is expected to grow 4.5-5% this year
Anil Agarwal, executive chairman of Vedanta group, which includes Sesa Sterlite in its fold, said: “People have high hopes from the new government and so has the industry. India’s falling GDP is primarily a function of manufacturing slowdown, including mining and of hydrocarbons. Though India has an abundance of reserves and resources of bauxite, coal, iron ore, copper and gold etc., it is spending billions of dollars on their imports. Hundreds and thousands of large SMEs can be set up across the nation to process our raw material and further manufacturing to create new jobs. The government should auction natural resources in the most sustainable and transparent manner, on revenue sharing basis or highest royalty.” Analysts agree on perceptions about improved infrastructure spending in the post-election scenario. As Rajaji Meshram, senior manager, capital projects and infrastructure, at PwC pointed out: “There are hopes accelerated infra spending on mega projects like DelhiMumbai Industrial Corridor and Chennai-Bangalore Industrial Corridor etc. will boost steel demand.”