Rubber price deflates tyre stocks, opportunity to buy

The whopping rise in rubber prices is set to deflate the earnings of tyre companies. After the stock prices registered a fall, these companies looked  reasonably priced and offered an investment opportunity with an upside potential of 15-25% in 12 months time.

While the domestic rubber spot price is trading up from Rs 160/kg in October, 2010  to all all-time high at Rs 242/kg. The price at the international market too shot up from 297 yen/kg in August, 2010  to Rs 535 yen/kg .  The demand for rubber has escalated following a ramp-up in global auto sales.