Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Poll: Steel still king - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 8, 2003

    Poll: Steel still king

    "I think future leaders are resource-based companies like steel, oil and mining". These are the words of the renowned investment guru, Dr. Marc Faber in reply to the question posed to him as to who will lead the Indian stock markets going forward. The above is an excerpt of Dr. Faber's interview with Equitymaster.com on his recent visit to India.

    The above statement tends to highlight the similarity existing between what Dr. Faber thinks and what the readers of Equitymaster believe i.e. steel is the commodity to be invested in at the current juncture. In a poll conducted on our website last week, wherein we asked our readers, "At the current juncture, which commodity sector looks attractive?" The result of the poll is indicated in the pie chart below.

    Not to our surprise (unfortunately), steel sector continues to dominate the retail investor's buy list! A good 53% of the respondents believed that steel sector continues to remain attractive, which was followed by cement at 34% and the balance 13% favoured the aluminium sector.

    We too believe that since steel sector has an important role to play in the development of any economy, the Indian steel story is not over yet as the infrastructure and housing story is yet to pan out fully. However, we have been cautious towards the sector owing to the steep valuations at which some steel stocks have been trading in recent times. These stocks have run up too soon on the bourses. Moreover, we believe that while the volume story for the steel sector will continue into FY05, it is the possibility of pricing pressure that is likely to creep up owing to rise in steel capacities during FY05. However, all said and done, for FY04, investors can expect good results for steel companies as steel prices have continued to sustain ground, and both, steel consumption and exports, have as yet shown no signs of weakening.

    While the audience has voted for the steel sector, our vote would go for the cement sector (out of the three options here). With monsoons almost coming to an end, construction and infrastructure activities are likely to pick up and this would definitely give a boost to the cement consumption in the country, which in turn would help improve cement prices. Just to put things in perspective, cement prices remained higher by 3.8% during April-July 2003 (in the Mumbai market) and with production expected to rise, the industry prospects are looking good. It must be noted that with no fresh cement capacities likely to crop up in the near future, the demand-supply gap for the cement industry is likely to be on the narrower side, which in turn will keep a check on any fall in cement prices. In sum, FY04 will be a better year for the cement sector as compared to last year.

    The third sector here is the aluminium sector. The prospects of the aluminium industry seem bright after a poor FY02 and an average FY03. While the demand for the metal is expected to show a steady growth of 3%-4% globally, on the domestic front, the prospects are even better with growth expected to be in the vicinity of 6%. The government's thrust on infrastructure in itself could emerge as a crucial growth driver in the long run. The power sector is the sector's largest consumer and it must be remembered that 'electricity for all' is one of the top priorities of the government. Passage of the Electricity Act 2003 is another positive for the sector as it encourages players to venture not only into generation of power, but also set up transmission and distribution facilities. Besides, economic recovery will aid demand from packaging and consumer durable sectors, and consequently fuel revenue growth. Thus, considering the fact that the per capita consumption of aluminum in India is very low and India is an emerging market, the longer-term demand outlook remains positive. We feel that FY04 will be a good year for the aluminum sector, especially for players with a strong presence in the alumina segment, which has seen prices double YoY.

    While the investors may be overly optimistic over the prospects of the steel sector and unduly cautious over the aluminum sector, our advise to investors would be too look beyond FY04 and re-consider their investment options with a long-term horizon in mind. To conclude, this is what Dr. Marc Faber had to say when asked about the investment opportunities for investors, "They should be in...equities that have a large asset base. As I mentioned, I would be long on commodities, including............"



    Equitymaster requests your view! Post a comment on "Poll: Steel still king". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)