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Cement sector stocks are seen range bound with an upward bias next week as the segment has already witnessed the necessary correction in stock prices over the past few weeks. However, the upward movement will be limited because of the subdued demand outlook for cement in the near term as the monsoon has already set in. Prices of the construction materials are also expected to remain under Pressure during the monsoon months. While the industry managed to hike prices in May '13 (thereby reversing the loss/declines in April 2013), the onset of monsoon may lead to price declines in the coming months across regions excluding south.
Eyes will also be on the Reserve Bank of India's monetary policy stance, to be announced on Monday. A cut in key policy rates would translate into lower interest rates and thereby propelling housing demand. Cement, whose utility is derived from construction and housing activity, will see some pick-up in demand if interest rates are slashed. The Street will also discount the Supreme Court judgment, refusing to stay the Competition Appellate Tribunal's order on 10 cement companies and the Cement Manufacturers' Association to deposit a 6.3-bln-rupee-fine on a case of alleged cartelisation. The Supreme Court gave companies time till Jun 24 to submit the amount. According to analysts, companies have already made provision for the amount.
