On Thursday, December 5, shares of HEG Ltd. demonstrated volatility, fluctuating between gains and losses, while Graphite India faced a sharp decline of 6%, making it one of the top losers on the Nifty 50 index. Both stocks had experienced a rally earlier this week, gaining between 15% and 30% over the last two trading sessions.

High Transaction Volume for HEG
HEG recorded a substantial trading volume as 45.3 lakh shares, equivalent to 11.7% of its outstanding equity, changed hands during multiple large transactions. These shares were traded at an average price of ₹578, resulting in a total transaction value of ₹271 crore. This activity underscores strong interest from institutional investors in the stock.

HEG's share price edged up 0.7% to ₹585.75 during the session, reflecting investor confidence despite the volatility.

Graphite India's Sharp Decline
Meanwhile, Graphite India shares plunged 5.8% to ₹573.1, reversing the bullish momentum seen earlier this week. The downturn comes as investors reassess the impact of recent news, including China's export quotas on flaky graphite and synthetic graphite, which had initially fueled the rally.

Clarifications by Brokerage Firm InCred
Brokerage firm InCred clarified that graphite electrodes, used in Electric Arc Furnaces, are manufactured from needle coke, not directly from graphite. As a result, the China export quotas on graphite are unlikely to impact the production of graphite electrodes significantly.

For HEG, InCred highlighted that:

• The company neither mines natural graphite nor produces synthetic graphite used in Electric Vehicle (EV) batteries.
• While HEG has plans to set up a synthetic graphite plant, this initiative is still in its early stages and is projected to take several years before becoming operational.

These insights provide a clearer picture of the limited impact of China's graphite quotas on HEG and Graphite India in the short term.

The Road Ahead for HEG
HEG’s proactive plans for synthetic graphite production demonstrate its strategic vision to diversify its portfolio and cater to the growing demand for EV batteries and other applications. However, the company will need significant investment and time to achieve these goals.

Investors should closely monitor developments related to HEG’s synthetic graphite plant and the broader impact of China’s graphite export policies on the global market.

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