Metal stocks slide 1-6% ahead of F&O expiry; JSPL at 3-year low

Metal stocks took a beating for the third consecutive session and were the biggest losers on Tuesday, with index heavyweights Hindalco Industries, Jindal Steel & Power, Sterlite Industries and Tata Steel falling 1-6% on heavy volumes ahead of the expiry of August futures and option (F&O) contracts on Thursday.

Sterlite Industries was the biggest loser and witnessed its biggest daily fall since February this year. On the BSE, Sterlite ended the day at R104.50, down R5.65 or 5.13%. As many as 73.23 lakh shares were traded on the BSE and the NSE.

Jindal Steel & Power also declined sharply due to continued worries about the impact of the recent Comptroller & Auditor General (CAG) report on the government's coal concessions. Investors responded by sending the stock down to its lowest level in over three years. Subsequently, JSPL ended the day at R358.75, down R18.40 or 4.9%. More than 86 lakh shares were traded on the BSE and the NSE.

Tata Steel, on the other hand, ended at its eight-month low with the scrip closing at R378.40, down R7.10 or 1.84%. The BSE Metal index ended at 9,999.07, down 277.90 points or 2.7%. Intraday, the index had shed 354.51 points to slip to 9,922.46.

"Barring certain companies that are related to coal related issues, stocks were heavily sold ahead of the F&O settlement. Due to the absence of a physical delivery mechanism, metal stocks get dumped on heavy volumes and usually witness a correction of around 25-30% during each F&O expiry. These scrips are manhandled by certain operators," said a Mumbai-based analyst.

Market experts also attributed the sharp decline in Tuesday's session to slow industrial growth in the country and prevailing concerns over global macro-economic conditions, besides F&O expiry.

"Globally, ferrous and non-ferrous metals prices have been under pressure due to poor demand. Steel prices, for instance, have fallen to the lows of 2009 because slowdown in China is hurting demand and forcing to cut the demand for iron ore," said an analyst with Religare Commodities.

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