The Hindu Business Line : Cement stocks stubborn, steel wilts under pressure

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Mumbai March 6 While cement stocks were given the thumbs up for not cowering to the Government's demand to bring down retail prices, steel stocks were hammered on Tuesday on the BSE. The BSE Metal index finished 35 points down at 8002.12 even as the BSE Sensex gained 2.27 per cent.

Cement shares came off lower levels in volatile trade even as there were reports before the end of the day's session that the Finance Minister, Mr P. Chidambaram, will be meeting the cement company officials on a roll back in cement prices. Cement producers on Monday told the Industry Ministry they will not pull back on the recent price hike of Rs 12 per 50 kg bag.

ACC surged 5 per cent to Rs 854.50, Grasim gained one per cent to Rs 2,124.95 and Gujarat Ambuja Cements was up 1.7 per cent at Rs 113.80.

"We have revised our price assumptions for cement stocks downwards. While the excise duty hike has been passed on, the threat of Government intervention remains due to persisting high inflation and impending elections in Uttar Pradesh. Further adverse Government intervention measures cannot be ruled out given that the Government considers Rs 190 per bag as a reasonable price level and anything beyond this as `unreasonable,'" said an Edelweiss report.

Excise duty on cement priced above Rs 190 per 50 kg has been hiked to Rs 600 per tonne from Rs 400. Duty on cheaper (less than Rs 190) cement bags was cut to Rs 350 per tonne.

Metal shares led by Hindalco and Jindal Steel witnessed heavy selling. Hindalco lost 3.02 per cent at Rs 130 while Jindal Steel fell 1.6 per cent to Rs 2,182. State-run Steel Authority of India finished flat at Rs 97.05 (Rs 97) recovered from day's low of low of Rs 91.50. Tata Steel slipped to Rs 419.30 (Rs 420.25) after touching day's low of Rs 404.55.

Steel makers on Monday decided to cut prices by Rs 300-Rs 700 per tonne. Producers have also agreed to cut prices of hot rolled coils by Rs 500 a tonne.

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