GE Shipping shares rises 11%

MUMBAI: The shares of Great Eastern (GE) Shipping rose as much as 11% intraday on Wednesday — highest intraday gain in 18 months — after the company said it had an investor meet with Reliance Treasury. As a rub-off effect, other shipping stocks also rallied, but analysts remained cautious on the outlook of GE Shipping and the industry over sluggish economic growth in many developed economies, which weighs on global trade.

The GE Shipping stock hit 52-week high of Rs 470.35 on Wednesday but pared some of the gains to close at Rs 452.85, up 6.83%. The stock has gained 25% so far this year compared to benchmark index Sensex’s return of 11% since January 1.

“Informing the stock exchanges about the investor meet is mandatory as per the new Sebi listing regulations and investors should not read too much into it,” said market analyst SP Tulsian. “GE Shipping and other shipping stocks rallied because they are under owned.”

Esben Poulsson, president at Singapore Shipping Association, said in a media briefing on Tuesday that the shipping industry, especially dry bulk and containers, has seen a marked improvement over the last 12 months, which also boosted the sentiment in the stocks.

The shares of Shipping Corporation and Essar Shipping gained close to 4% each, while Shreyas Shipping rose about 3%. The Baltic Dry Index — a gauge of shipping costs for several raw materials — after touching a low of 290 on February 12, 2016 bounced back to 1,294 on Wednesday.

There is a lot of optimism built up in the market looking at the Baltic Dry Index, but fundamentally shipping sector is not promising, said analysts.

“Fundamentally, nothing has changed for shipping companies expect the rise in Baltic Dry Index (BDI),” said Pankaj Pandey, head of research, ICICI Securities. “The earnings of shipping companies are expected to remain subdued in the near term.”

Other related stocks such as Mercator gained about 4%, while Shahi Shipping and Seamec gained 5% each.

“The shipping stocks have found sudden interest from the investors due to rise in BDI and encouraging trade data,” said Kush Katakia, CEO, Beanstalk Advisory. “Many of the shipping stocks have underperformed in last one or two years and the Street always finds such themes in the bull market.”