Tata Steel back on bears’ radar
Bears are learnt to be having another go at the Tata Steel stock, despite having been caught on the wrong foot by better-than-expected quarterly numbers. Many of the traders, who had covered up their short positions last Wednesday, are said to have built up fresh ones on Friday, betting on a near-term downtrend in the stock. While the latest set of quarterly numbers came as a pleasant surprise, leading brokerage firms are divided on the outlook for the stock.
Those bullish on the company are expecting a decent recovery in demand for steel in the European market, while those bearish on the stock feel an improvement in the European operations will be much slower, because of sluggish demand. Tata Steel shares ended the day at Rs 572, up 1.7% over the previous close.
Party may be over for auto cos
Apprehension over an imminent hike in excise duty has resulted in most fund houses reducing their investments in stocks of automobile companies recently. According to analysts tracking the sector, the party for auto companies is drawing to a close over growing apprehensions of a roll-back in stimulus package, a spike in raw material costs and rise in consumer loan rates.
There is talk that with demand being robust, the government will increase excise duty on passenger vehicles between 2% and 4%, which will shave-off profit margins by a good measure. The government had reduced excise duty from 12% to 8% in December 2008. Rising costs of input materials like aluminium, steel and rubber will upset the pricing flexibility of auto manufacturers, say analysts.
Punters take a shot at Renuka Sugars
Traders, with long positions in shares of Shree Renuka Sugars had some anxious moments on Monday. Many brokers had recommended a trading buy on the stock soon after the company’s announcement to buy a majority stake in a Brazilian sugar firm for Rs 1,530 crore. But, the stock opened lower and stayed there for some time, forcing the traders to unwind their long positions.
According to brokers, a few operators managed to spark some panic among these traders by selling aggressively to create a perception that the deal would impact the company’s finances. They relied on the recent trend in large overseas acquisitions, where the event followed a sell-off in the stock of the buyer company. Within an hour into the trading session, these operators started covering their short positions, thereby leading to a sharp rebound in the stock.
Contributed by Nishanth Vasudevan, Santosh Nair & Shailesh Menon
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