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Stocks of major steel companies are seen down slightly over the next few sessions as fundamentals remain weak, and profit booking is likely to kick in because of the recent rise in the stocks. Weak demand for steel amid high supply will weigh on these stocks. There is nothing happening in the steel sector. Recently, stocks of steel companies had risen and so, profit booking is expected. This week, stocks of major steel companies such as Steel Authority of India, Tata Steel, JSW Steel, and Jindal Steel and Power gained 1-5%. The stocks got a boost as investor sentiment improved when US policymakers cleared a bill to delay the spending cuts and tax hikes that were to come into effect in the country on Jan 1.
Also, data from China showing further improvement in the country's non-manufacturing activity raised hopes of economic revival there. If China's economy recovers, the country's demand for commodities is likely to go up. China is the world's largest consumer and producer of steel. We recommend sell in all steel stocks at current levels. JSW Steel raised the prices of its steel products from Jan 1 as global prices of the alloy are firm, and the company is facing upward pressure on input costs. Steel companies' (Oct-Dec) earnings are also not expected to be very good, which may keep the overall tone bearish in the stock(s).
Stocks of major steel companies are seen down slightly over the next few sessions as fundamentals remain weak, and profit booking is likely to kick in because of the recent rise in the stocks. Weak demand for steel amid high supply will weigh on these stocks. There is nothing happening in the steel sector. Recently, stocks of steel companies had risen and so, profit booking is expected. This week, stocks of major steel companies such as Steel Authority of India, Tata Steel, JSW Steel, and Jindal Steel and Power gained 1-5%. The stocks got a boost as investor sentiment improved when US policymakers cleared a bill to delay the spending cuts and tax hikes that were to come into effect in the country on Jan 1.
Also, data from China showing further improvement in the country's non-manufacturing activity raised hopes of economic revival there. If China's economy recovers, the country's demand for commodities is likely to go up. China is the world's largest consumer and producer of steel. We recommend sell in all steel stocks at current levels. JSW Steel raised the prices of its steel products from Jan 1 as global prices of the alloy are firm, and the company is facing upward pressure on input costs. Steel companies' (Oct-Dec) earnings are also not expected to be very good, which may keep the overall tone bearish in the stock(s).
