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Cement stocks are likely to track the market which looks upbeat in the coming sessions. Although demand for cement is still sluggish and unlikely to show any major signs of improvement in the near future, market will mostly discount this fact, as the general trend in the street is on the upside. Stocks of cement companies did not react much yesterday to the Competition Appellate Tribunal's order that directed them to pay 10% of the 63.07-bln-rupee penalty, imposed on them for forming a cartel, in four weeks. Stocks of these companies may not react to the order even in the coming week. Most cement companies, especially the big three players, have already detailed their Jan-Mar numbers. Results of most of the companies have been disappointing but that has already been factored in by the market and there is no immediate trigger.
Investors will now keep an eye on Jan-Mar earnings of India Cements, scheduled on May 20. While the current market scenario is depressed, we expect demand to pick up in the medium term. Benefits resulting from likely decline in interest rates, pre-assembly and general election infrastructure spending, pick-up in individual housing and affordable housing along with improvement in the execution of stalled projects are expected to boost performance of the sector.
