stock market today Within minutes of the opening of the bell, three stocks of steel got lower circuit today. These three stocks are Tata Steel, Steel Authority of India (SAIL) and JSW Steel. Perhaps the central government’s announcement to calibrate customs duty on raw materials for iron and steel products by reducing import duty on some steel products and levying export duty on some did not go down well on Dalal Street.
tata steel share price today opened with a near drop 73 per share and went on to hit the lower circuit 1053.20 level on BSE. SAIL’s share price fell in early morning deals and was placed on the lower circuit 74.70 level on BSE. Similarly, JSW Steel share price opened under heavy selling pressure and closed lower circuit. 567.80 per share level.
Terming export duty on steel as a major negative for the sector, the CLSA report says, “To curb inflation, the Finance Ministry has cut excise duty for petrol and diesel as well as export duty on most steel products. declare. This is likely to lead to higher supply towards the domestic market. With prices now being guided by the export parity philosophy (instead of import parity), this could lead to a sharp correction steel prices in India. This is unlikely to be offset by lower coking coal and iron ore prices and tighter global balances. Therefore, we cut our estimates in our steel company coverage and downgraded all three stocks: Tata Steel, BUY to underperform, JSW to underperform SELL, and JSPL, BUY to outperform. Well suited for cement and consumer durables.
citing the reason for the sharp decline in steel stock Today, the ICICI Security Report says, “The Government of India has imposed export duty on steel, steel making raw materials and middlemen to maintain high domestic supply and control rising prices. Most of the steel/stainless steel exports are now subject to 15% export duty (we see this as an extremely negative development for the steel sector and expect a broad-based multi-D-rating. We hold/reduce/sell the steel/stainless equities under our coverage) We will downgrade Tata Steel, JSPL, JSW Steel and SAIL.”
“The government announced that it will calibrate customs duty on raw materials for iron and steel products by reducing import duty on some steel products and levying export duty on some. ‘Iron and steel’ is a product category where India runs a trade surplus. In the last two years, in FY22/FY21, the trade surplus was USD10.3b/USD3.8b. India’s import dependence on ‘iron and steel’ has reduced over the years and in FY22 only 2.1%. 2.8-3.6% in FY06-16. In fact, India’s ‘iron and steel’ exports constituted 5.5% of total exports in FY22 – the highest since at least FY04,” the domestic brokerage said. Motilal Oswal said in a note.
Santosh Meena, Head of Research, Swastika Investmart Ltd., said, “To contain inflationary pressures, the government has decided to impose export duty on iron ore and steel while reducing import duty on coal, a major challenge for ferronical steel manufacturers. raw material. The 15% export duty on flat steel will make Indian steel prices less competitive globally and most steel producers are not sure whether the domestic market will absorb the excess production or not. All these factors help steel makers in their future plans. Will force you to evaluate.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.