Steel futures hit lower circuit of 4 pc on speculative buying
Speculation behind steel futures' slump, say analysts.
By PTI |
NEW DELHI: Steel futures, which have risen by up to 12 per cent in the last one month, slumped sharply by 4 per cent in the domestic market today owing to speculative buying.
Mild steel ingot of July delivery on NCDEX made low of Rs 35,810 per tonne, down by 4 per cent. The August contract too took a beating and slipped to the lower level of 4 per cent at Rs 36,270 per tonne.
According to experts, prices are bearish as investors are liquidating their long position on speculation that the demand for steel in the domestic market may slump in monsoon.
"The recent announcement made by the Central Bank on housing loans is likely to hit the construction of houses and in turn the demand for steel," Karvy Comtrade Analyst Vishal Maniyar told PTI.
Besides, the possible price hike of 21 per cent announced by the world's top four steel maker including Posco has also affected futures prices, he said.
Another major factor for the negative trend is that the government had made it clear last week that it may not interfere quite often in curbing steel prices, marketmen said.
According to SMC Brokerage Analyst Vandana Bharati, "Fundamentals are not favourable for today's price fall. However, the declining trend could be attributed to speculators' selling spree".
Futures prices have rallied so much in the last one month that new investors are not buying at these levels. It is only speculators, who are risk averse, are booking profit on long positions, she said, adding "some big players are moving the market".
Otherwise, the bullish trend in the prices are expected to continue for some more days. Prices may take some correction at Rs 34,500 per ton levels, analysts said.
Mild steel ingot of July delivery on NCDEX made low of Rs 35,810 per tonne, down by 4 per cent. The August contract too took a beating and slipped to the lower level of 4 per cent at Rs 36,270 per tonne.
According to experts, prices are bearish as investors are liquidating their long position on speculation that the demand for steel in the domestic market may slump in monsoon.
"The recent announcement made by the Central Bank on housing loans is likely to hit the construction of houses and in turn the demand for steel," Karvy Comtrade Analyst Vishal Maniyar told PTI.
Besides, the possible price hike of 21 per cent announced by the world's top four steel maker including Posco has also affected futures prices, he said.
Another major factor for the negative trend is that the government had made it clear last week that it may not interfere quite often in curbing steel prices, marketmen said.
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According to SMC Brokerage Analyst Vandana Bharati, "Fundamentals are not favourable for today's price fall. However, the declining trend could be attributed to speculators' selling spree".
Futures prices have rallied so much in the last one month that new investors are not buying at these levels. It is only speculators, who are risk averse, are booking profit on long positions, she said, adding "some big players are moving the market".
Otherwise, the bullish trend in the prices are expected to continue for some more days. Prices may take some correction at Rs 34,500 per ton levels, analysts said.
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