www.rupeedesk.in
Stocks of major steel companies are seen rangebound in coming sessions because of continued weak fundamentals and lack of fresh triggers to initiate movement on either side of price scale. Low domestic demand for steel has increased supply of the alloy, as producers have not reduced their plant capacity utilisation. The consequent imbalance in demand-supply scenario is likely to weigh on steel companies to some extent.
Weak fundamentals is not a new scenario and so steel companies may not see a sharp fall, said analysts. However, the tone will remain bearish. Though China is beginning to show some signs of recovery, there is a lot that needs to improve in the market for the metal sector to perform. China is the world's largest producer and consumer of steel, and therefore its steel sector is closely eyed by the rest of the world. On Thursday, China's Purchasing Managers' Index for November was 50.4, compared with a final reading of 49.5 in October, signalling expansion for the first time in about 13 months.
China's steel sector may take a while to show improvement. Until then, the global steel industry will be in a wait-and-watch mode.
Stocks of the country's leading primary steel producer, Tata Steel, has already touched its lowest level on dismal financial results. The company's
stocks are expected to now stabilise at the current levels until some fresh news comes in. Tata Steel reported a net loss of 3.64 bln rupees for Jul-Sep as against a net profit of 2.12 bln rupees in the corresponding quarter last year.
