No reason to sell steel stocks outright

CNBC-TV18’s Executive Editor, Udayan Mukherjee - I think the sentimental hangover will remain in steel now. I don’t think these exports ban etc are particularly material. So it’s not as if Tata Steel, SAIL or JSW cannot export and therefore the huge hit on revenues, flood the domestic markets with more steel and therefore domestic prices will collapse. I don’t think that it will play out like that at all. But the market or investors will get that niggling feeling that the government is beginning to sort a finger this sector little bit. So export ban first, then may be import duties will get cut, then finally price rises will get directly tinkered with, so this hangover might just remain on steel companies and reign in any kind of out performance.

My guess is that steel companies will find it very difficult in the current inflation scenario to raise price meaningfully from here on. Materially that might not impact their numbers too much at best cap the upsides for the numbers but sentimentally I think it might hamstring these companies. The one stock, which might get effected a bit on the export, could be JSW Steel, so you need to watch that a bit carefully. So no reason to sell them outright but perhaps reign in outperformance for sure, particularly if your view on global commodities is a less sanguine now.