Tata Steel clocks huge volumes as FIIs shift focus to defensive stocks

Our Markets Bureau

Mumbai, May 16: THE foreign institutional investors (FIIs) seem to have shifted their focus. Besides buying across the board, they have concentrated on value buying, particularly after the Securities and Exchange Board of India (Sebi) decision paving the way for the introduction of rolling settlement on the domestic bourses from
July 2.

They have taken fancy to some of the defensive stocks. According to market circles the Tata Steel stock is one of such defensive stocks in the FIIs list.

The stock was in limelight on Wednesday mainly because of a sudden spurt in the trading volumes. The price rise in this counter is steady, looking at the large equity base, said PRS Stock Broking’s AK Bhansali.

The Tata Steel counter recorded a huge trading volume of 65.27 lakh shares at both the The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) with the price rising more than 6 per cent to close at Rs 135.20. Such a huge volume of over 27 lakh shares was once witnessed at BSE on April 25.

Tata Steel, currently the worlds lowest-cost producer of steel is making an effort to shield itself from the vagaries of the steel market. The company has fine-tuned its product mix by substituting its low-value products with high-value items. Moreover, Tata Steel is also in talks with French steel major Usinor for a marketing tie-up.

The move will give Tata Steel a reach in the European markets for its high-end products as Usinor can sources high grade value-added steel from Tata Steel for its markets in Europe. The talks are said to be in the finalisation stage, industry sources said. Usinor is expected to benefit from this tie-up by leveraging on Tata Steel’s network in the South-East Asian markets, including India.

This is seen as Tata Steel’s efforts to become an overseas player in steel. The company has already started to make its presence felt in the overseas market by announcing plans to set up a $50 million green field Ferro-chrome plant in Gladstone at Queensland in Australia.

The marketing tie-up with Usinor will help Tata steel sell its high-end products at a premium, which could significantly contribute to its bottomline. Tata Steel would substitute low-value products with value-added items, as the difference in realisations per tonne of hot rolled products and cold rolled coil is over $100 per tonne, giving the company an earning of over Rs 5,000 per tonne, on an average of the steel sold.