HEG shares surge to a six-year high after a 30% surge in two sessions

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HEG shares surge to a six-year high after a 30% surge in two sessions

Both HEG and Graphite India are trading with gains on very significant volumes during Wednesday's trading session.

December 4th, 2024 News

Shares of HEG Ltd. have skyrocketed, marking a six-year high after a remarkable 30% surge over two trading sessions. Graphite India, its industry peer, also witnessed notable gains during Wednesday’s session, with both stocks trading on exceptionally high volumes.

Key Highlights

HEG Performance:
- Gained 13% on Wednesday, December 3.
- Trading at ₹557.4, up 11.3% for the day.
- Highest level in six years.
- Volume surge: 2.1 crore shares traded, compared to a 20-day average of 4.1 lakh shares.
Graphite India Performance:
- Gained 6% during the session, trading at ₹604.
- Volume surge: 88.8 lakh shares traded, against a 20-day average of 3.7 lakh shares.
Technical Indicators:
- Relative Strength Index (RSI):
  - HEG: 79
  - Graphite India: 73
- RSI above 70 suggests both stocks are in overbought territory.

What Triggered the Rally?

The surge in HEG and Graphite India shares can be attributed to recent geopolitical and trade developments:

China's Export Ban:
- China announced a ban on exports of gallium, germanium, antimony, and superhard materials to the United States, citing concerns over potential military usage.
- Stricter controls were also imposed on dual-use products related to graphite, a key raw material for various industries, including electronics and steelmaking.
Rationale Behind the Move:
- The Chinese Ministry of Commerce stated that the US has “generalized the concept of national security” and “weaponized economic, trade, and tech issues.”
- As part of its response, China aims to control the export of materials critical to global supply chains, directly impacting demand for graphite products.

Market Implications

The ban is likely to create supply constraints for graphite-related products, positioning Indian companies like HEG and Graphite India as key beneficiaries. These companies produce graphite electrodes used in steel manufacturing and are expected to see increased global demand amid China’s restrictions.

Investor Sentiment

The market has responded positively to these developments, pushing shares of both HEG and Graphite India to multi-year highs. However, with RSI levels in the overbought zone, investors should monitor the stocks closely for potential corrections.

Conclusion
The ongoing geopolitical tensions and trade dynamics have created a favorable environment for Indian graphite manufacturers. With their strategic importance to global industries, both HEG and Graphite India are poised for further attention from investors.

Disclaimer: This article is for informational purposes only and should not be considered investment advice. Investors are advised to conduct their own research or consult with a financial advisor.