Mittal-Arcelor deal drives auto stocks in reverse gear
Amid the euphoria at the success of Mittal Steel's battle for Arcelor, automotive companies were found sulking due to expectations of an imminent surge in steel prices, a key raw material for the industry.
By PTI |
MUMBAI: Amid the euphoria at the success of Mittal Steel's battle for Arcelor, automotive companies were found sulking due to expectations of an imminent surge in steel prices, a key raw material for the industry.
Share prices of the domestic automakers and auto component firms plunged as much as 9 per cent on Monday on the Bombay Stock Exchange, as analysts forecast a sharp rise in their input costs due to the expected consolidation and price increase across the global steel market.
The combined entity after the merger of Mittal Steel and Arcelor, the world's two largest steel makers, collectively holds more than 10 per cent of the global steel market and the deal is expected to pave the way for further consolidation in the industry, market observers said.
With increased consolidation activity, steel prices are likely to further firm up as the market would be eventually dominated by a few leading players, they added.
The auto industry is likely to be hit hard by further rise in steel prices, which have already increased considerably over the past few months, a leading market analyst said in the backdrop of the deal agreed upon by Mittal and Arcelor.
The concerns in terms of an expected surge in input costs led to sharp selling pressure witnessed in the auto sector shares with the BSE Auto index losing a huge 4.25 per cent on Monday.
Car majors Maruti Udyog and Tata Motors shed more than 5 per cent, while auto component firms Rico Auto and Amtek Auto lost between 3.5 per cent and 6 per cent.
As many as 22 stocks on the BSE Auto index closed in the red, while Apollo Tyre was the only index scrip that managed to close in positive territory with a marginal gain of 0.17 per cent.
Maruti shed 5.1 per cent to Rs 735.80, Tata Motors lost 5.8 per cent to Rs 730.45 and Hindustan Motors moved down 8.6 per cent to Rs 30.20.
Among other majors, Hero Honda dropped 4.3 per cent to Rs 733 and Bajaj Auto moved down 4.1 per cent to Rs 2,595.30.
Amtek Auto dropped 3.6 per cent to Rs 287.20, Rico Auto lost 6 per cent to Rs 72.30, Ashok Leyland shed 4.4 per cent to Rs 35.65, Bharat Forge plunged 3.7 per cent to Rs 303.40, MICO moved down 1.4 per cent to Rs 2,663.45 and Motherson Sumi slipped 3.4 per cent to Rs 85.
Share prices of the domestic automakers and auto component firms plunged as much as 9 per cent on Monday on the Bombay Stock Exchange, as analysts forecast a sharp rise in their input costs due to the expected consolidation and price increase across the global steel market.
The combined entity after the merger of Mittal Steel and Arcelor, the world's two largest steel makers, collectively holds more than 10 per cent of the global steel market and the deal is expected to pave the way for further consolidation in the industry, market observers said.
With increased consolidation activity, steel prices are likely to further firm up as the market would be eventually dominated by a few leading players, they added.
The auto industry is likely to be hit hard by further rise in steel prices, which have already increased considerably over the past few months, a leading market analyst said in the backdrop of the deal agreed upon by Mittal and Arcelor.
The concerns in terms of an expected surge in input costs led to sharp selling pressure witnessed in the auto sector shares with the BSE Auto index losing a huge 4.25 per cent on Monday.
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Car majors Maruti Udyog and Tata Motors shed more than 5 per cent, while auto component firms Rico Auto and Amtek Auto lost between 3.5 per cent and 6 per cent.
As many as 22 stocks on the BSE Auto index closed in the red, while Apollo Tyre was the only index scrip that managed to close in positive territory with a marginal gain of 0.17 per cent.
Maruti shed 5.1 per cent to Rs 735.80, Tata Motors lost 5.8 per cent to Rs 730.45 and Hindustan Motors moved down 8.6 per cent to Rs 30.20.
Among other majors, Hero Honda dropped 4.3 per cent to Rs 733 and Bajaj Auto moved down 4.1 per cent to Rs 2,595.30.
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Amtek Auto dropped 3.6 per cent to Rs 287.20, Rico Auto lost 6 per cent to Rs 72.30, Ashok Leyland shed 4.4 per cent to Rs 35.65, Bharat Forge plunged 3.7 per cent to Rs 303.40, MICO moved down 1.4 per cent to Rs 2,663.45 and Motherson Sumi slipped 3.4 per cent to Rs 85.
The overall market sentiment also remained sluggish today, with the euphoria around the Mittal-Arcelor deal failing to ward off huge selling pressure ahead of a crucial meeting of the US Federal Reserve on Wednesday.
Even steel stocks ended the day deep in the red, as market analysts said, expectations for consolidation in the steel industry has been already factored into their share prices over the past few days.
All the 15 metal stocks on the BSE Metal index closed in negative territory, led by a sharp fall in share prices of the steel stocks.
Private sector steel major Tata Steel lost 6.9 per cent to Rs 495.75, PSU behemoth SAIL lost 7.64 per cent to Rs 75.55, while other steel stocks such as Essar Steel, Jindal Stainless, Jindal Steel, JSW Steel and Sesa Goa also suffered huge losses.
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