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Sensex inches up; Tata Steel rises after declaring results

Sensex inches up; Tata Steel rises after declaring results
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First Published: Wed, Feb 16 2011. 10 48 PM IST
Updated: Wed, Feb 16 2011. 10 48 PM IST
Mumbai: India’s benchmark stock index rose for the fourth day, led by steel producers, on prospects of higher demand in Asia’s second fastest growing major economy, and as Tata Steel Ltd posted profit that more than doubled.
Tata Steel, the nation’s largest producer of the alloy, climbed 4% after net income, including that of Tata Steel Europe Ltd, rose to Rs1,003 crore ($220 million). Steel demand may double in the next five years, said Kunal Shah, head of commodity research with Nirmal Bang Securities Pvt. Ltd in Mumbai. Jindal Steel and Power Ltd, the second biggest producer of the alloy by value, advanced 2.9%.
Also See | Volatile session (Graphic)
The Bombay Stock Exchange’s sensitive index, or Sensex, rose 27.10 points, or 0.2%, to 18,300.90 at close in Mumbai, after swinging between gains and losses at least 25 times. The gauge, at its highest level in two weeks, has lost 13% from a 5 November record as the central bank raised borrowing costs to curb inflation. A slump of 20% or more signifies a so-called bear market to some investors.
Demand for steel will continue to be strong as India spends on improving its infrastructure, said Deven Choksey, managing director at K.R. Choksey Shares and Securities Pvt. Ltd in Mumbai. Prospects look bright for companies such as Tata Steel that plan to raise production capacities to meet such demand.
The S&P CNX Nifty Index on the National Stock Exchange was little changed at 5,481.70. The BSE 200 Index advanced 0.2% to 2,255.98.
Companies on the Sensex are valued at an average 17.2 times estimated earnings, down from the last year’s high of 21.5 times in March, according to data compiled by Bloomberg.
Tata Steel climbed 4% to Rs641.05 on the Bombay Stock Exchange, its highest close in almost three weeks. Sales rose 10%. Profit from Indian operations climbed 27%, according to the company’s statement to the stock exchange on Tuesday.
Jindal Steel and Power Ltd rose 2.9% to Rs669.70, its best close in almost three weeks.
Growth in demand for base metals in India may jump 10-15% this year, said Sumit Verma, an analyst at broker Geojit Comtrade Ltd.
The drivers will be growth and development of key sectors of the economy such as infrastructure, power, construction, energy and transportation, Verma said. The outlook for the next 5-10 years is bullish.
Prime Minister Manmohan Singh has proposed $1 trillion of spending in the five years through 2017 to upgrade the nation’s road, railway and power networks. India’s economy will probably grow 8.6% in the year to March, the most in three years, the government’s statistics office said on 7 February.
Larsen and Toubro Ltd, the country’s biggest engineering company, gained 1.8% to Rs1,654.5, while Jaiprakash Associates Ltd, a builder of dams, jumped 6.7% to Rs90.3.
Global funds bought a net Rs228 crore of Indian equities on 14 February, according to data on the website of the Securities and Exchange Board of India. Overseas investors have sold $1.6 billion more shares than they bought this year.
Graphic by Yogesh Kumar/Mint
Madelene Pearson contributed to this story.
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First Published: Wed, Feb 16 2011. 10 48 PM IST
More Topics: India | Markets | BSE | NSE | Sensex |