Downturn in realty bad news for steel industry in India
Economic Times reported that the significant slowdown in residential real estate market, which could last for a couple of years, is bad news for the entire economy. Given that protracted slowdown will have a seriously damaging effect on several sectors, companies and stocks, be cautious before you make your next investment.
After realty, building material companies cement, steel, paints, etc will be the worst affected due to a slowdown in demand, say experts.
For companies from steel sector, the Indian real estate slowdown has come at the worst possible time. This is because this global commodity is already facing problems on account of a huge over-capacity, especially in China. "In addition to the negative global demand-supply situation, the steel sector companies are also loaded with debt," says Phani Shekhar, Fund Manager, PMS, Karvy Stock Broking. Even as the government is trying to protect the sector by increasing the import duty, the recent devaluation of the Chinese currency, yuan, is going to worsen the sector's woes. In addition to dumping steel into India, Chinese companies will also snatch other export markets from Indian companies. Companies like Tata Steel, which have large European operations, may continue to be under pressure for sometime.
Source : Economic Times