Cement Stocks Outlook: Choppy next wk; India Cements to outperform

[K.Karthik Raja]

Cement Stocks Outlook: Choppy next wk; India Cements to outperform
Friday, Jul 4

MUMBAI - Cement shares are likely to witness choppy movement next
week in line with the volatility in broad market, dealers said. Among
frontlines, India Cements is seen outperforming as firm trend in
cement prices continues in the company's key market south India,
analysts said.
Although most cement shares are hovering around their 52-week lows
touched Thursday, analysts are not recommending buying these shares
due to bleak outlook on pricing of commodity and likely fall in
demand.
Rising interest rates are expected to impact demand for housing
and
construction sector thereby pressuring demand for cement. This,
coupled with proposed expansions is likely to see cement prices
weakening, said an analyst with an international brokerage.
Cement companies hiked prices of the commodity in southern region
Tuesday by 3-5 rupees per 50 kg, and are likely to hike rates further
by 3 rupees next week along with western region.
However, dealers and stockists are of the view that the hike in
western region is unlikely to be sustained due to slackening demand
during monsoon.
WebLink://Click here for story:/id=10633 - 02-07-2008/go
Frontline cement companies posted robust sales growth in June on
the back
of good demand for the commodity amid construction activity at its
peak.
However, the performance is likely to turn sluggish in July due to
a pause
in construction activity during monsoon, except in south India.
WebLink://Click here for story:/id=10399 - 04-07-2008/go
.
STOCK VIEW
Shares of India Cements are likely to find major support at 130
rupees
and the stock can touch 147 rupees and a major resistance is expected
around
this level, said Shrikant Chouhan, vice president, technical research,
Kotak
Securities.
ACC has pierced major support of 500 rupees and is likely to find
good
support at 450 rupees, said another technical analyst adding that the
stock
may face resistance between 520-535 rupees.
Ultratech Cement is seen facing strong resistance at 540 rupees,
which if
broken can move up to 590 rupees, Chouhan said.
Immediate support for the stock is expected at 510 rupees and
major
support is seen at 470 rupees, he said.
Ambuja Cements is expected to be most volatile share among cement
peers
with the stock seen moving in a wide range of 58 rupees to 88 rupees,
Chouhan
said.
.
This week's closing prices, in rupees, of key cement shares, on
National
Stock Exchange, compared with previous week:
.
Company Closing price Closing price % Change
Jul 4 Jun 27
.
ACC 477.35 579.70 (-) 17.7%
Grasim Industries 1,690.85 1,944.40 (-) 13.0%
Ambuja Cements 74.80 81.35 (-) 8.0%
India Cements 130.80 146.85 (-) 10.9%
Ultratech Cement 537.25 568.90 (-) 5.6%
.
Sensex 13454.00 13802.22 (-) 2.5%
Nifty 4016.00 4136.65 (-) 2.9%
End
.

[B. Karthick]

Cement Stocks Outlook: Choppy next wk; India Cements to outperform

Saturday, Jul 05.

Cement shares are likely to witness choppy movement next week in

line with the volatility in broad market. Among frontlines, India

Cements is seen outperforming as firm trend in cement prices continues

in the company's key market south India.

Although most cement shares are hovering around their 52-week lows

touched Thursday, we are not recommending buying these shares due to

bleak outlook on pricing of commodity and likely fall in demand.
Rising interest rates are expected to impact demand for housing
and
construction sector thereby pressuring demand for cement. This,
coupled with proposed expansions is likely to see cement prices

weakening.

Cement companies hiked prices of the commodity in southern region
Tuesday by 3-5 rupees per 50 kg, and are likely to hike rates further
by 3 rupees next week along with western region.

Frontline cement companies posted robust sales growth in June on
the back of good demand for the commodity amid construction activity
at its peak.
However, the performance is likely to turn sluggish in July due to
a pause in construction activity during monsoon, except in south
India.

STOCK VIEW
Shares of India Cements are likely to find major support at 130
rupees and the stock can touch 147 rupees and a major resistance is

expected around this level.

ACC has pierced major support of 500 rupees and is likely to find

good support at 450 rupees, resistance between 520-535 rupees.

Ultratech Cement is seen facing strong resistance at 540 rupees,

which if broken can move up to 590 rupees.

Immediate support for the stock is expected at 510 rupees and

major support is seen at 470 rupees.

Ambuja Cements is expected to be most volatile share among cement
peers with the stock seen moving in a wide range of 58 rupees to 88

rupees.

This week's closing prices, in rupees, of key cement shares, on
National Stock Exchange, compared with previous week:

Company Closing price Closing price % Change
Jul 4 Jun 27

ACC 477.35 579.70 (-) 17.7%
Grasim Industries 1,690.85 1,944.40 (-) 13.0%
Ambuja Cements 74.80 81.35 (-) 8.0%
India Cements 130.80 146.85 (-) 10.9%
Ultratech Cement 537.25 568.90 (-) 5.6%

Sensex 13454.00 13802.22 (-) 2.5%
Nifty 4016.00 4136.65 (-) 2.9%

End

B.Karthick,
Research Analyst.