Commodity Online
MUMBAI: Metals stocks take a bullish stance with base metals continue playing key role for the industrial recovery, which is seemingly picking up pace in near term.

The metal stocks have shown signs of recovery with steady rise in the stock price on anticipation of global economic recovery. Indian metals majors have shown a positive trend over past few months. The stocks on Bombay Stock Exchange (BSE) have recorded a considerable surge in the prices.

Greater consumption from the infrastructure sector and renewed demand from power sector has rejuvenated metal stocks, which moved with a sluggish note on the bourses a few months back. Steel, aluminium, copper, zinc and lead witnessed movement during the last quarter of the past fiscal.

Reports suggested that copper prices had fallen during the third quarter of the FY09. But during the Q4 the prices averaged higher due to increased demand from domestic industry as well as from China. This gave a booster to the copper stocks on BSE, which were trading in red during the third quarter of the FY09.

Sterlite Industries Ltd (BOM 500900) touched Rs.429 level in the beginning of October 2008, since then the stock had been on a slide during the month and settled in the range of Rs.205 to Rs.307 till January beginning. However, the stock price remained range bound even during the fourth quarter, but since 13th March 2009, the stock has been constantly on the rise.

Stock price has appreciated by nearly 33% from Rs.283 to Rs.425 during mid-April 2009. However, the company had reported a below estimate results for the Q4 FY09 and for FY09. The impact was seen on the stock prices as it soothed marginally to Rs.409 on Wednesday, April 29, 2009. Sterlite’s adjusted profit after tax stood at Rs.4.2 bn down by 63.5% (YoY). Similarly, adjusted PAT for the financial year was down by 24.8% (YoY) at Rs.33.3 bn.

Similarly, steel sector too had shown robust growth during fourth quarter of the past fiscal. Most significantly, the rapid spurt in the stock prices was witnessed during February and March 2009. Leading steel stocks recorded nearly 30% appreciation in stock price. Tata Steel Ltd rose by 28.92% from Rs.184.65 on 31st January 2009 to Rs.238.05 recently. Public sector major, Steel Authority of India Ltd (SAIL) rose by 32% from Rs.82.80 to Rs.109.30 recently.

Bhushan Steel Ltd and JSW Steel Ltd recorded robust rise in the stock prices by 44.52% and 59.50% respectively. Bhushan Steel Ltd is priced at Rs.415.50 recently against Rs.287.50 on 31st January 2009, while JSW Steel Ltd surged to Rs.336.55 from Rs.211. Orissa Sponge Iron & Steel Ltd posted a whopping rise of 164.09% from Rs.123 .35 on 31st January’09 to Rs.325.75 recently.

Likewise there has been steady rise in the stock price of Zinc stocks and Aluminium stocks on the bourses over past three months. Birla Group company, Hindalco Industries Ltd and Vedanta Group zinc miner, Hindustan Zinc Ltd traded high on the bourses following improving demand situation from the industries and infrastructure.

With global scenario improving especially due to increased demand form China, has led the metal stock recover from their gloomy days. Experts opined that the uptrend would continue to prevail on the bourses as the demand from large consumers like China and India would keep the surging over times. However, countries are still far from the full recovery status. China's economy grew by 6.1% in the first quarter, slowest in 10 years.

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