Steel stocks are trading in the red led by Sesa Goa and Ispat Industries. The steel companies are awaiting a hearing on the ongoing ban on mining in Karnataka. It may be noted that iron ore spot prices have been rising by US$ 1-2 each day after the ban came into effect last week. This has prompted the steel companies to revise their prices upwards. Prices have crossed the US$ 150 per tonne mark already. It may be noted that Karnataka accounts for 25% of the steel production in India. Hence, the ban and subsequent Supreme Court hearing on the same will prove to be crucial for the steel companies. In fact companies like JSW Steel have been forced to shut down most of its furnaces resulting in a 30-40% production cut.
Automobile stocks are also down led by Tata Motors and Mahindra & Mahindra. India's auto major Maruti Suzuki is planning to increase its capacity at Gurgaon plant by 50000 units. The auto company hopes that the increased capacity will help it meet high demand for its Swift Dzire model and reduce waiting periods. This increase in capacity is despite the slowing demand for cars on account of the negative sentiment. This in turn is due to the rising interest rates as well as the higher fuel prices. The company also hopes to free up capacity by cutting down on production for cars whose sales have taken a dip like the Maruti Alto. In order to protect its falling market share, the company plans to target other segments like multi-utility vehicles (MUVs).