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Friday, Aug 11, 2006

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Tyre stocks on a roll

Tyre stocks have been gaining momentum recently. Most of the stocks have appreciated by six per cent to as high as 35 per cent during the past week, with increased trading volumes. MRF gained six per cent while TVS Srichakra clocked a maximum gain of 35 per cent in the last one week. Others such as Goodyear (19.5 per cent), Apollo (9.2 per cent) and Ceat (12 per cent) also appreciated with improved volumes. According to analysts tracking the sector, the main trigger for the uptrend is the recent recommendation by the Directorate-General of Anti-Dumping and Allied Duties to consider imposing provisional anti-dumping duty on import of cross-ply truck-bus tyres from China and Thailand. Truck-bus tyre imports from China earlier attracted import duty and CVD totalling 37.1 per cent. Brokers point to the recent fall in rubber prices as another factor that bodes well for the industry. Spot rubber prices, which were around Rs 118 a kg in May, are currently ruling at Rs 92. Dealers said that yet another reason for interest in these stocks is the good monsoon. Demand for automobiles is likely to remain firm, which will in turn keep the tyre demand strong. The automobile industry is already clocking robust growth.

K. S. Badri Narayanan

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