The share price of tyre companies jumped 6.35 per cent on Monday on expectations of improvement in margins following a sharp decline in rubber prices.
The stock of MRF rose the maximum to Rs 43,073.35 apiece on the BSE, followed by Ceat, which rose 6.04 per cent to Rs 1,128.30 a piece. With Monday’s gain, thestock of Goodyear India (2.85 per cent) and Apollo Tyres (3.73 per cent) hit their respective 52-week highs.
“On anticipation of better profit margins, investors are buying fresh shares,” said an analyst with a large broking firm. Trading currently at Rs 12,014.25 a quintal in the domestic market, natural rubber price has hit the lowest in five months following global trends.
The price has nosedived 17 per cent in the past five weeks after hitting a high of Rs 14,428.35 a quintal on August 8. The fall has been attributed to a sudden jump in output. Data compiled by the Rubber Board show India’s natural rubber production rose 11 per cent in July from a year ago to 52,000 tonnes. Imports, meanwhile, fell marginally in July to 41,157 tonnes from 41,917 tonnes, while consumption jumped 4.3 per cent to 83,400 tonnes on a year-on-year basis.
The fall in prices, however, seems temporary as it is based on the supply cut by major producing countries. Meanwhile, the International Tripartite Rubber Council, a grouping of Indonesia, Thailand and Malaysia, has decided to trim exports by an additional 85,000 tonnes from September to December this year.