FIIs pare exposure to steel, except for Tata Steel

Even though steel has emerged as a turnaround sector, it has failed to impress foreign institutional investors (FIIs).

FIIs pared their exposure to major steel corporates, with the exception of Tata Steel, between March and September of 2003.

FIIs reduced their stake in Steel Authority of India Ltd (SAIL), Jindal Vijaynagar Steel Ltd (JVSL), Ispat Industries and Essar Steel over the first half of the current year.

In Ispat Industries, their holding was brought down from 4.31 per cent to 0.02 per cent, in Essar Steel from 2.02 per cent to 1.38 per cent, SAIL from 1 per cent to 0.61 per cent and JVSL from 0.27 per cent to 0.15 per cent. In Tata Steel, however, FIIs increased their stake from 4.21 per cent to 6.31 per cent.

But, the counters did manage to evoke interest from other quarters. Public holding in JVSL increased from 22.65 per cent to 25.54 per cent, in SAIL from 3.66 per cent to 3.79 per cent, Ispat from 10 per cent to 13.75 per cent. The holding of private corporate bodies also went up in some of the counters.

Analysts tracking the sector said, FIIs booked profit at the counters during the period and offloaded in favour of the big-ticket stock brokers and operators, which were still bullish on the stocks.

Big-ticket stock brokers held substantial stakes in all steel companies, analysts said adding that they are unlikely to offload their stakes in the near future.

"Buoyed by the turnaround in the sector and periodical price revision, domestic operators set targets for every stock. They will continue to hold on their investment before the price targets are reached," analysts added.

The market is optimistic about the steel story in 2004. Prices, which had just been hiked by around Rs 1,500 per tonne, is expected to go up further owing to rising input prices.

Industry sources said the recent price hike is not to the same extent as the price increase in raw materials, which implied that there is likely to be further hikes in the near term.