Polycab, KEI Industries shares decline up to 6% on rising copper prices

Shares see profit booking in trade.

• Polycab and KEI shares drop 7.5% due to rising copper prices.
• Copper prices surged after strong economic data from China.
• Wire and cable makers face headwinds due to commodity volatility.

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Shares of wire and cable makers Polycab and KEI Industries declined up to 6 percent in Tuesday’s trade amid a rise in copper prices.

Shares of KEI Industries touched an intraday low of Rs 4,429 per share on the NSE, down 7.53 percent and at a one-month low. The stock has declined for the last two trading sessions. It later settled at Rs 4,554 per share, lower by 4.92 percent.

Meanwhile, shares of Polycab fell 6.62 percent to an intraday low of Rs 7,684 per share on the NSE. The stock has been declining for the last three trading sessions and is down nearly 10 percent during the period. It settled at Rs 7,725 per share, down 6.12 percent.

The decline comes as copper, a key raw material used in the manufacture of wires and cables, moved higher.

According to Informist, the futures contracts of copper on the London Metal Exchange rose on Tuesday following better-than-expected economic data from China, the top consumer of the metal. Sentiment was also supported by dip-buying by Chinese investors after weakness in the previous session.

In an interaction with CNBC-TV18 on Tuesday, Renu Baid Pugalia of IIFL Capital said the cables and wires segment may face near-term headwinds amid concerns around volume growth. She added that channel stocking and commodity volatility are also weighing on the stocks.

Polycab’s management had earlier said copper accounts for 50-60 percent of its overall raw material costs. Prices had surged in the third quarter when global copper prices hit a record high. The company has passed on the increase, which may help margins recover in the ongoing fourth quarter.

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