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Long product market in India remains in shadow of Diwali
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Saturday, 17 Nov 2012

Diwali is considered as harbinger of good business fortune. Even the most beleaguered market is kindled with fervor seeking blessings of Goddess Laxmi aspiring for prosperity. Need for blessings were never more acute with the steel market in an abyss, paralyzed by economic and policy crisis. If it was the deepening political and economic crisis in India the global economic crisis piped any recovery with plummeting exports despite weakening currency.

Indian government mired in deepening fiscal debt made desperate attempts at kick starting revival with announcing slew of reformatory measures viz.,
1. 51% FDI in retail
2. 49% FDI in Insurance
3. 49% FDI in Airlines

After an initial blip the market took it with a pinch of objectivity waiting the effective execution of pompous announcements.

At the same time WPI inflation stuck at 7.45% in October keeping the RBI on conservative course refusing to decrease lending rate. Market remained cash strapped severely crippling business activity and investment.

Undeniably FDI in retail promises to be a proponent of turnaround in reality sector an insatiable need for malls across the country. However till now there has been circumspection by the global giants in testing their toe in troubled waters gathered after a massive political outcry. Ensuing winter session of the Parliament (22nd November) will generate confidence if the government is able to weave through with the head start.

Raw material market remained in self- contradiction as the scrap prices revived on winter scarcity but the sponge iron supply and price remained depressed as furnace owners switched over to scrap. In the likelihood of cost push long prices is likely to get kick start.

Inventory levels with stockiest and traders have been hand to mouth for some time but the urge to replenish in a major way is amiss with lack of buying. Project demand from infrastructure sector has also lagged owing to completion of old projects not followed by announcements of new ones by a government in policy paralysis.


ILPPI - Indian Long Product Price Index
IFPPI - Indian Flat Product Price Index
INDSPI - Indian Steel Price Index

Market has remained ambivalent during the last week with business taking a dip during festivities and is expected to open up by first week of December in full swing with return of laborer after the Chaath festival in Eastern India fountain of workforce.

Certainly fireworks are in offing around that time with a mosaic of factors interplaying to catalyze affirmative movement in market.

Source - Strategic Research Institute


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