Steel scrips were the most conspicuous gainers early today following a hike in long steel product prices by major steel producers.

The price hike propelled stocks of the two biggest steel makers in the country -- Steel Authority of India (up 1.88% to Rs 12.46) and Tisco (up 1.05% to Rs 158.90) - higher, just as trading commenced today. Sail registered volumes of around 1 lakh shares while Tisco notched up 35,563 shares on BSE by 10:05 IST.

The two scrips were already doing well prior to the rise. In the 24 sessions between 28 April and 2 May 2003, Sail leaped up 40% and Tisco jumped 25%.

Reports suggest that steel majors have hiked prices of long steel products by Rs 200-500 per tonne following strong domestic demand from booming construction activity in the country.

But analysts caution that domestic steel prices are expected to stabilise at the current levels. In any case, these levels are at least  higher than those reached last year. The bright side is that the buoyant construction and automobile sectors will provide the limit to any downside in demand for steel.

The capital goods industry is also expected to register strong demand. At the same time, a greater thrust on infrastructure projects, including national highway and roadway projects, will only serve to enhance demand for steel.

International demand for steel, especially from China, is also expected to increase. Recently, China announced higher annual quotas, which should result in a recovery in prices. The world's largest steel importer, China, has decided to buy 9.2 million tonnes of steel from Indian companies over a one-year period following huge construction activity there.

On the back of strong demand for steel, which was also backed by a rise in prices, both Sail and Tisco recorded impressive results.

For Q4 ended 31 March 2003, Tisco recorded a massive 283% rise in net profit to Rs 469.08 crore (Rs 122.47 crore) on a 39.5% increase in net sales to Rs 2,664.76 crore (Rs 1,911.48 crore). For FY 2002-03, the company recorded a 394% rise in net profit to Rs 1,012.31 crore (Rs 204.90 crore) on a 29.3% increase in total income to Rs 8,771.71 crore (Rs 6,783.12 crore).

Sail recorded a turnaround, registering a net profit of Rs 241.65 crore for Q4 compared to a net loss of Rs 417.07 crore in the corresponding period of the previous year. Total income increased by 25.5% to Rs 5,671.43 crore from Rs 4,519.99 crore in MQ 2002. For the full year, the company reduced losses to Rs 304.31 crore on total income (net of excise) of Rs 17,591.09 crore.