Steel stocks are in the limelight as of now as steel majors are expected to hike prices on prospects of rising domestic and global demand.

As a result, Steel Authority of India (up 4.41% to Rs 17.04), Essar Steel (up 4.66% to Rs 13.70), Jindal Vijaynagar (up 6.64% to Rs 7.87), Jindal Iron (up 2.27% to Rs 119.50) and Tisco (up 1.27% to Rs 159.90) all recorded strong gains on substantial volumes.

Reports suggest that steel majors are planning a hike in prices next week, after a three-month hiatus. The move to hike prices comes on the heels of an increase in early July 2003 export prices for shipments to China being negotiated by Japanese and Taiwanese steel companies.

Analysts feel the demand for steel is buoyant in the international market, especially as China embarks on infrastructure building ahead of the Olympic Games in 2008.  Recently, China announced higher annual quotas, which should reflect in a recovery in flat steel 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 .

On the domestic front, too, steel prices are expected to stabilise at current levels, higher than that of last year. The construction and automobile sectors, it is expected,  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.

On the back of strong demand for steel, which was also coupled by a rise in prices, steel companies have managed turnarounds in FY 2002-03.

The market capitalisation of the overall steel sector, comprising 56 Steel Large and Steel Medium/Small companies, rose by 46.2% to Rs 17,997.68 crore from Rs 12,312.13 crore in the last three months.