Shipping stocks shoots up to 11%; likely new rules may boost fleet

Shares of shipping companies such as Shipping Corp of India (SCI) , Mercator, Great Eastern Shipping and Essar Shipping gained up to 11 per cent in trade on Wednesday as new rules are expected to boost local shipping fleet and dent foreign shippers.

The stock of SCI ended 4.48 per cent higher to Rs 82.75 after gaining as much as 10.85 per cent, Great Eastern shipping closed 1.38 per cent up after surging 6.32 per cent intraday, while Mercator and Essar Shipping added 6.33 per cent and 3.76 per cent at close, respectively after hitting their intraday highs of 12.22 per cent and 9.67 per cent on Bombay Stock Exchange.

The government is proposing importers to sign 5-year contracts with local shipping firms in a move designed to shift freight worth billions of dollars to domestic flag carriers and help boost fleet companies.

"Its an EPS accretive news if and when it materialises," a domestic fund manager said to Reuters.

State-owned firms may have to give half their freight business to local shippers to help rescue an industry battered by the global commodities downturn.

In 2013-14, the country paid about $57 billion in freight payments to foreign firms

Shipping Minister Nitin Gadkari was not immediately available to comment.