Mumbai, Sept. 4: Hopes that a shutdown at the Nippon Steel Corp of Japan would favour Indian companies abroad set steel shares afire on bourses today.
The Japanese company suspended operations at a key plant following a blast and fire. Market watchers said this would leave a void in the global market for local firms to fill.
Steel companies had been one of the best performers in the stock rally of recent months until operators looking to cash in on the gains dumped them in a stock churn that soaked up pharmaceutical stocks.
The tide turned this morning. Tata Iron and Steel Company (Tisco) shot up 2 per cent to Rs 258.30 while Steel Authority of India (SAIL) rose more than 3 per cent to Rs 39.65. Jindal Steel and Power jumped by more than 4 per cent to Rs 747.30 and Jindal Vijaynagar Steel Ltd firmed up by 8 per cent to Rs 15.90.
The gains came even as many were wondering how the work suspension at one of the world’s largest steel companies would help Indian firms. A senior official from a leading steel company that could benefit from it said the impact would not be significant since Nippon largely makes special grade steel.
Sources say the output that will be lost is around two million tonnes for a quarter. This is equivalent to 1 per cent of global trade in steel. “The effect on Indian industry will not be much. Even if the plant is closed for around three months, the market shortfall could 1.5-2 million tonnes. But that will help China more,” they added.
The steel binge was one of the drivers behind the 52-point gain in the sensex, which closed at 4310.51 in a gain of 1.23 per cent over Wednesday’s 4257.94.
Foreign funds kept up their buying binge in software shares, especially in pharmaceutical and software shares, to help the reverse Wednesday’s losses.
The darling of the trading ring was Infosys, which jumped Rs 403.10 or 10.56 per cent to Rs 4219.00 from its last finish of Rs 3815.90 on heavy FII purchases.