The Hindu Business Line : It's a roller-coaster ride -- Steel gains 20% in M-cap; entertainment loses 15 pc

OLD ECONOMY stocks like those of steel companies, which had witnessed a steady decline throughout the last financial year, are showing visible signs of improvement, while new economy stocks such as entertainment companies, whose values steadily increased during 2001-02, have shown a downward trend since the beginning of the current fiscal.

Midway into the first quarter, stocks of steel manufacturers have shown a steady rise while that of entertainment companies have moved the other way.

Last year also, they moved in opposite directions, but then, steel companies lost value while entertainment companies gained.

Now it is the other way round. The combined market capitalisation of the top seven steel manufacturers stood at Rs 7,301.8 crore when the market closed on Friday, up 19.81 per cent since the beginning of the year when the market capitalisation stood at Rs 6,094 crore on April 1, 2002.

On the other hand, the top eight entertainment companies' combined market capitalisation stood at Rs 6,791.71 crore, down 14.6 per cent compared to Rs 7,959.59 crore recorded on April 1 this year.

Between April 1, 2001 and April 1, 2002, the market capitalisation of entertainment companies went up by 32.94 per cent, while the market cap of steel companies fell by 16.54 per cent.

Market analysts said that during last year, there was great interest in entertainment heavyweights such as Balaji Telefilms, Zee Telefilms and Tips Industries on the back of positive developments such as the Zee-Turner joint venture and Balaji's successful soaps.

However, during the April-May period, the dip in the market capitalisation of entertainment companies has been attributed to the Government's decision to implement conditional access system (CAS).

"With CAS, broadcasting companies such as Zee, TV-18 and Sri Adhikari Brothers have been hit. This will impact the subscription as well as advertising revenues of broadcasters,'' said an analyst.

The improvements witnessed in the steel sector are an outcome of the price hike effected last month by all the steel manufacturers, market analysts said.

Additional focus in the Budget on roadways and other infrastructure activities too are helping the steel makers report better sales figures. Realisations have improved, and hence, prices may be expected to improve further, a senior broker said. The share prices of steel stocks have all uniformly gone up during the April-May period, reflecting a uniformity of industry conditions.

On the other hand, there had not been a uniform decline or rise in the prices of entertainment sector stocks, reflecting that individual companies had responded differently to changed conditions, analysts said.

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