Metal stocks hit hard, end-users skirt downturn

New Delhi, April 20 | Updated: Apr 21 2005, 05:58am hrs
The recent downturn in the equity market has led to significant erosion in the value of metal stocks, but the scrips of end-user companies have escaped relatively unscathed.

Steel sector stocks saw an average 7.86% decline in prices since last Friday, while non-ferrous metal (aluminium, copper and zinc) stocks were hammered down 7.85%. In comparison, stocks of steel pipe makers declined 4.85%, 4-wheel automobile manufacturers 2.65%, cable makers 0.45%, auto component suppliers 2.07% and 2-wheeler producers 3.64%.

The decline in metal companies stocks has been in tandem with the decline in world metal prices, which have been falling for the past few weeks. On the London Metal Exchange, aluminium price have declined 5.2% since April 1 to $1,869 per tonne while copper dipped 1.61% to $3,353 per tonne and zinc 8% to $1,241. Similarly, in the National Commodities and Derivative Exchange of India (NCDEX), steel prices (for mild ingots) witnessed a 3.6% dip to Rs 20,311 per tonne for the same period.

Among the 125 companies studied across sectors, over 112 scrips posted negative returns. Steel companies were hammered the most with 8 scrips making it to the list of top 10 stocks in terms of negative returns. Essar (24.83%), National Steel & Agro (15.33%), Mahindra Ugine Steel (14.08%) and Sail (12.87%) lost the most in value.

Analysts say that this decline is in line with global trends. Globally, metals stocks are dipping on low commodity prices. There are fears that growth in China and India might not be as high as expected. On Tuesday, a SocGen report on metals said demand from India will not mirror that of China.