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Sterlite Industries tumbles

September 14, 2009

The BSE Sensex ended 0.3 percent down on Monday snapping a six-day rally. Shares in metals maker Sterlite Industries dropped 3.5 percent to 719 rupees.

Sterlite Industries is already in the news after it proposed to raise its offer price for bankrupt U.S. copper miner Asarco to $2.565 billion.sterlite-ind

Shares in the company gained nearly 7 percent in September alone while in 2009 the share has gained over 150 percent, Thomson Reuters data showed.

Asarco, which owns three copper mines in Arizona, was acquired by Grupo Mexico in 1999. A U.S. bankruptcy court has recommended that Grupo Mexico be allowed to take control of Asarco.

Although the Asarco-Sterlite deal would involve a cash payment by Sterlite Industries, a decision would be taken on varying factors such as the feasibility of each proposed plan, payment to creditors, functioning of the company and employees.

Copper fell to near two-week lows on Monday, tracking overseas leads such as a global inventory build-up and firmness in dollar. A strong dollar makes commodities priced in dollars more expensive for holders of other currencies.

Do you think the all-cash deal for Asarco involving liquidity outflow for the company and falling raw material demand will weigh on stock prices?

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