| Subject: |
Cement, steel stocks fall up to 10% as Rail Budget fails to meet expectations |
|
NEW DELHI: Cement and steel stocks declined up to 10 per cent in Thursday's trade amid fears that the Rail Budget may not provide any material boost to infrastructure demand. Stocks declined even though the Railway Minister Suresh Prabhu avoided the widely-anticipated freight hike in the Rail Budget.
Among the steel stocks, Jindal Steel tanked 9.94 per cent to Rs 54.30. SAIL fell 2.40 per cent to settle at Rs 34.55. Tata Steel ended almost flat at to Rs 248.05. Bhushan Steel fell 1.19 per cent at Rs 33.25.
A total of 31 cement stocks ended lower on BSE.
Katwa Udyog plummeted 9.76 per cent to close at Rs 55. India Cements slumped 4.82 per cent to Rs 67.15. Birla Corporation fell 3.46 per cent to 340.50.
Other cement stocks such as ACC (down 2.83 per cent), Ambuja Cements (down 1.10 per cent) and UltraTech Cements (down 0.61 per cent) failed to get a lift from Rail Budget announcements.
In 2016-17, the Rail Ministry has targeted commissioning 2,800 km of new tracks. The ministry has set targets of commissioning Broad Gauge lines at over 7 km per day against an average of about 4.3 kms per day in the last six years.
Suresh Prabhu announced three new freight corridors in the Budget 2016. All contracts for earlier dedicated freight corridor worth Rs 24000 crore is already awarded. The minister also plans to introduce more dedicated corridor, atleast three, to link key metro cities to improve freight traffic.
One of the policy initiatives introduced in the budget is to increase East-West freight corridor which may be extended by 5 km.
In the previous Rail Budget, the government had hiked freight rate by 10 per cent for urea, 6.3 per cent for coal and 0.8 per cent for iron & steel companies. It had also lowered freight rate for high-speed diesel by 1 per cent. The railways have a revenue target of Rs 1.21 lakh crore in FY16, compared with Rs 1.06 lakh crore in FY15.
Data showed UltraTech Cement paid freight at Rs 1,184 per tonne in the December quarter, while others cement makers such as ACC (Rs 1,135/tonne), Ambuja Cements (Rs 1,131/tones), JK Lakshmi Cement (Rs 911/tonne) and Ramco (Rs 907/tonne) also paid significant freight charges in the quarter gone by.
Steady freight rates also offered some relief to the steel sector. Of late, the government has taken steps to shield the domestic steel industry from cheap imports.
The government has recently set a minimum import price on 173 steel products ranging between $341-$752/tonne, which would remain in place for six months. In September 2015, a 20 per cent safeguard duty was by the government on certain flat steel products, including hot-rolled coils for 200 days.
Between 2011-12 and 2014-15, the share of freight earnings in total traffic earnings jumped from 66.8 per cent to 67.4 per cent for the railways, ET reported.
In the 11th plan period (2007-12), the freight movement registered a compounded annual growth rate of 5.8 per cent.
Source : economictimes.indiatimes.com
|