Investors likely to turn cautious on cement

Cement shares are seen choppy next week with a negative bias, as investors turn cautious on the sector after monopolies regulator on Thursday held cement companies guilty of unfair trade practices.

Impending December derivatives expiry Thursday is also likely to add to the volatility, dealers said, highlighting that open interest positions in these contracts are high.

Monopolies and Restrictive Trade Practices Commission has asked cement companies to file a compliance report within eight weeks and desist from fixing prices in any arrangement directly or indirectly.

The order relates to MRTPC case in 1990 against Cement Manufacturers' Association and 44 cement makers. Hearing of probe announced in July against 14 cement companies is likely next month.

Despite the order, most analysts and industry officials are of the view price hikes for the next couple of months will continue as cost pressure is escalating, especially pressure related to power and fuel.

STOCK VIEW

Shares of Grasim Industries are seen finding support at Rs 3,420 and can face resistance at Rs 3,650, a technical analyst said. Support for shares of India Cements is seen at Rs 293, which if broken can take the share down to Rs 287, he said. On the upside, India Cements can touch Rs 310, he said.

UltraTech Cement shares are close to major support of Rs 960 and are unlikely to fall below that, the analyst said, adding the share may face resistance at Rs 990.

Shares of ACC could move higher from current levels, the analyst said. However, for the share to make major gains, it must close above resistance of Rs 1,040, he said. Shares of Jaiprakash Associates are seen moving up on reports the company is eyeing a 4-5-mln-tn cement plant in West Asia.

If the deal goes through, Jaiprakash Associates will have a foothold in the West Asia region where the boom in construction sector has led to big demand for cement. The share closed nearly 2 per cent higher at Rs 400.50.

Shares of Sagar Cements are also likely to gain on news the company is setting up a 30 mw captive power unit that will be completed by June and will help the company save 80 paisa per 1 unit. HDFC Securities has recommended buying shares of Sagar Cements with a 12-month target price of Rs 492.