The Hindu Business Line : Second-rung steel stocks: Cash out

STOCKS such as Essar Steel, Lloyds Steel, Bhushan Steel, Ispat Industries, Mukand Ltd, the Jindal group , Monnet Ispat and Rathi Udyog have been in the thick of a bull run over the last few months. The continued increase in domestic steel prices on the lines of global trends and the potential for increased operational profitability have in turn led to a substantial upward revaluation of stocks in the sector.

However, with global trends indicating a potential easing of prices after the peak level reached earlier this year, the going may not be as good as last year for domestic steel companies.

This could be even more so for most of the loss making steel stocks that are more sensitive to changes in their performance parameters - especially prices. Many of them are also in the throes of a debt restructuring exercise, the results of which may take years to show up. Most sector stocks are trading at their 52-week highs. As such, this could be an opportunity for investors to cut exposures in these stocks.

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