Steel stocks are trading weak led by Jindal Saw and Tata steel. According to a leading financial daily, Steel Authority of India (SAIL) is planning to invest Rs 70 bn on producing value-added products that will be used in the automotive and white goods sector. The company is building a new cold rolling complex at the Bokaro steel plant that will boost its share of value-added products. The upcoming plant has a production capacity of 1 m tonnes of cold-rolled steel and 0.35 m tonnes of galvanised products. Currently, SAIL is leader in segments such as construction, power plant equipment, railways (including wagon-making), LPG cylinder manufacturing and other capital goods. However, in segments such as automotive, capital goods, oil and gas transport and pre-fabricated structures, SAIL lags its competitors.
Power stocks are trading in the red led by GVK Power and Infrastructure and Reliance Infrastructure. According to a leading financial daily, rating agencies such as Crisil Limited, Care Ratings and ICRA are set to downgrade more power companies this fiscal. This will make it tougher for operators of electricity utilities to access bank money for projects and will increase their borrowing cost significantly. The key reasons for downgrade include stretched receivables, delays in project execution and debt funded acquisitions. India's power sector is facing a tough situation due to sharp rise in coal prices, delays in land acquisition and environmental clearances and escalating losses and debt. Besides, there is no progress on tariff revisions and reforms.