Indian long steel market had rush of adrenalin on the penultimate day before the election results. Sans demand the rally was purely speculative. Indian industry and economy has been expectant of turnaround in the eventuality of stable government coming to power. There has been an aura of optimism with most opinion polls suggesting stable government which will be investor friendly. Expected reduction in lending rates to jerk investment and credit would certainly lead to improved buying.

An anticipated price hike owing to flurry in construction and project activities led to handsome rally in speculation sensitive long steel market. However this rally is going to be short lived since its sustainability will depend on the credit lines and demand. However labor shortage and low construction during monsoon foretells slow activity.

Moreover with the inflation hovering above 8% calls for raising the lending rates rather than reducing it will certainly stall revival. In the scenario even if the new dispensation brings it policy liberalization and stokes investment in new projects the turning point on sustained basis will come only in Q3.