Metal Stocks Outlook for the week – 11 to 15.04.2016
(Bias
positive; Tata Steel to remain in focus)
( www.rupeedesk.in )
Shares
of major metal and mining companies are seen trading with a positive bias next
week
on improved outlook for the sector, while Tata Steel is expected to remain in
focus
as it will begin a formal sale process for its loss-making UK business on Apr
11.
Increase
in global iron ore prices is expected to benefit domestic steel producers with
integrated
plants, as they will have an edge over competitors having to purchase raw
material
from other companies.
The
overall sentiment towards the sector has improved in the last one month, and
steel
prices
have improved since the imposition of minimum import price on cheap imports
from
China, South Korea and Japan, among others. On Wednesday, Tata Steel Chairman
Cyrus Mistry, in a meeting with UK's Secretary of State for Business Sajid Javid,
said the company will look at selling its UK assets in parts, if it can't find
a buyer for the whole business, a media report said.
Although
the sale of UK operations is seen as a positive for the company as it is a
lossmaking
business,
a probe by UK government's Serious Fraud Office concerning false certification,
detailing Tata Steel's products might dent the company's prospects.
Steel
Secretary Aruna Sundarrajan has said as the financial health of the sector has
improved,
it was unlikely to get monetary aid, which was earlier under consideration.
However,
in a negative, JSW Steel and Steel Authority of India's long-term issuer
ratings
were downgraded recently by Fitch Ratings on account of loss of profitability,
and
deterioration of financial profile, respectively.