After taking a good hit on Monday following US President Donald Trump’s decision to impose import tariff of 25 percent on steel and aluminium, steel stocks saw a strong opening on Tuesday following price hikes.
Jindal Steel, JSW Steel, and SAIL, among others, gained up to 3 percent, while Tata Steel was higher by around 2 percent. Overall, the Nifty Metal index was trading higher by around 2 percent.
Indian steel companies raised domestic prices by Rs 1,000 per tonne for March. Bank of America Merrill Lynch, in its research note, observed that this brings cumulative steel price hikes at 11 percent since December 2017.
The global research firm believes that the earnings outlook for such companies remains strong going ahead. This is particularly after price hikes and higher steel spreads.
BofAML also said that a comparison between domestic steel cost against landed imports’ discount rose to 6 percent. This widening, it said, should support domestic steel prices.
Among stocks, it prefers Tata Steel and JSW Steel. While it expects SAIL (Steel Authority of India) to benefit too, but remains cautious on rich valuations.
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