The Hindu Business Line : Metal stocks see red with 717-point meltdown

Mumbai, Aug. 16 BSE Metal index suffered the biggest loss among the sectoral indices in the market mayhem on Thursday. The index fell 717 points to close at 10,690.33.

Though the turbulence in metal stocks could not be directly attributed to the sub-prime lending in the US, it is said to have tracked the London Metal Exchange’s (LME) overnight loss of three per cent.

Prices on the LME fell due to a build up in inventory, suggesting that there could be more delivery on the Exchange.

Tata Steel, the world’s sixth-largest steelmaker, contributed the most to the slide. Its stock plunged 10.3 per cent to Rs 575.35, its lowest close in three months.

“Investors feel that Tata Steel’s fund raising programme may get costlier due to the prevailing sub-prime lending crisis in the overseas markets. Metal stocks also took cues from fall in LME prices,” said Mr N.V. Shah, Director, NVS Brokerage.

Performance chart

Hindalco Industries, the country’s largest aluminium company, lost 5.60 per cent to stand at Rs 145. The Aditya Birla flagship company, which also makes copper and owns mines, will soon make high-grade aluminium products for the body-in-white segment of cars as part of an integration process following its acquisition of Novelis.

BSE Metal Index had declined 8.89 per cent over the last one month compared to Sensex’s fall of 2.03 per cent.

Reduction in product prices by Hindustan Zinc saw its stocks drop 3.14 per cent to Rs 688. Hindustan Zinc said on Thursday that it had cut zinc prices by 2.7 per cent to Rs 1,53,900 per tonne with immediate effect. It also reduced lead prices by 1.9 per cent to Rs 1,37,000 per tonne.

Price cut

On August 2, the company slashed zinc prices by 3.8 per cent to Rs 1,63,500 per tonne. It also reduced lead prices by 6.9 per cent to Rs 1,37,200 per tonne.

Other metal stocks that took a beating include Maharashtra Seamless which fell by 2.3 per cent to Rs 564; Sterlite Industries, down 8.22 per cent to Rs 558; and JSW Steel Ltd, which slid 4.97 per cent to Rs 614.

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