Cement counters gain ground

Cement stocks grew stronger on Thursday following firm prices. Rumours of a possible increase in FII limits in India Cement also contributed to the rally.

There have been reports about clearance for increasing the height of the Narmada dam. This would help increase the cement demand.

Most cement scrips strengthened by five per cent or more. Cement scrips have been rising over the past few days due to firm prices. The rally was also aided by the continued thrust on infrastructure in the Budget 06-07.

On Thursday, when the Sensex inched up by 0.62 per cent, the major cement gainers were Gujarat Ambuja (up 6.29 per cent to Rs 98.05), ACC (up 4.97 per cent to Rs 749.4), Grasim (up 4.25 per cent to Rs 1,885.95), India Cement (up 4.28 per cent to Rs 165.55), Birla Corporation (up 9.86 per cent to Rs 328.15), Mysore Cement (up 9.53 per cent to Rs 38.5), Chettinad Cement (up 4.7 per cent to Rs 340), Saurashtra Cement (up 4.98 per cent to Rs 52.75), Gujarat Sidhee Cement (up 4.88 per cent to Rs 15.05), Mangalam Cement (up 5.48 per cent to Rs 140.6), Prism Cement (up 5.43 per cent to Rs 27.2), Andhra Cement (up 6.12 per cent to Rs 39), Shree Cement (up 4.88 per cent to Rs 834.9) and UltraTech (up 3.73 per cent to Rs 602.1).

Mitesh Shah, AVP-PCG sales at Brics says, "Most cement stocks have done well on the back of an expected price rise, going forward. The focus on infrastructure also directly helps this sector. Rumours of increase in FII limits in ACC may have also contributed to the increase."

Renewed buying was witnessed in cement stocks on Thursday. Heavy volumes were seen in many stocks. In light of the existing supply-demand situation in the country, cement prices are at high levels in most regions.

Demand for cement is assured from the government's focus on projects in roads and ports. Infrastructure is a major driver for cement demand and accounts for about 20 per cent of the total demand.

Reduction in import duty on HDPE (raw material for cement packaging) to 10 per cent also augurs well for the sector. Rural housing is another buoyant sector that is driving the sector.

Moreover, cement dispatches were strong last month resulting in an increase in sales of many companies.