Metal stocks bleed after Centre's export duty move on iron, steel inputs
Stocks of Tata Steel, SAIL and JSW Steel shares hit lower circuits. Some brokerage houses downgrade the steel sector post government's move.
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FollowNifty Metal bled 7 per cent on Monday in the aftermath of the Union government's decision on Saturday to notify export duty on 11 iron and steel intermediates and key steel products. At the same time, the government lowered the import duty on three key raw materials each for steel production and plastic products.
Among individual stocks (at 10:35 am), Tata Steel plunged 14 per cent to Rs 1,001.55, hitting a 52-week low on the NSE. Others like JSW Steel, Jindal Steel and Power, Jindal Stainless (Hisar), NMDC and Steel Authority of India (SAIL) from the metal index were down in the range of 10 per cent to 13 per cent.
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According to experts, Steel stocks have entered a 'no touch' zone for some time and investors would prefer to wait for the sector to stabilise before considering any investment.
The government says that its decision to impose export duty is aimed at increasing the local availability of iron ore and a few steel intermediates.
In a Twitter post, Finance Minister Nirmala Sitharaman had said that duty revision on iron and steel and their raw materials was aimed at taming prices.
"We are calibrating customs duty on raw materials and intermediaries for iron and steel to reduce their prices," she said.
The general opinion among market watchers is that the duties that have been imposed are pretty harsh. According to reports, some brokerage houses have downgraded the steel sector post government's move.
ICICI Securities downgraded Tata Steel, JSPL, JSW Steel and SAIL to Reduce on the grounds that the expected EBITDA increase cycle over the next 3-4 quarters in the steel sector had been interrupted by the government's move.
Global brokerage firm CLSA too downgraded steel major Tata Steel, JSW Steel and JSPL from buy to underperform and slashed its estimates on the steel stocks after the finance ministry move.
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