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Stocks of major cement companies are expected to trade with a negative bias during the week as the market sees no real pick up in demand for cement yet. Even though housing activity is expected to increase in parts of the country after a good monsoon that constitutes a small portion of what companies would like to bank on. Infrastructure spend is more what companies keep an eye on and that is not happening on the ground despite announcements. The market is expecting cement demand to revive on pre-election spending and rural demand following a good monsoon season. The general election is scheduled for Apr-May.
Unlike in the previous two general elections, when there was a strong build up of infrastructure orders, such a build up is absent in the current election cycle. Hence, the general perception that cement demand always improves ahead of elections seems too optimistic to us. We expect the good monsoon season and rural housing schemes to provide some respite for demand but believe that a rebound in demand is likely to lag market expectations. Companies to hike cement price any time from now, as they are looking at improving realisations and margins, but even that looks a distant possibility as of now.
Stocks of major cement companies are expected to trade with a negative bias during the week as the market sees no real pick up in demand for cement yet. Even though housing activity is expected to increase in parts of the country after a good monsoon that constitutes a small portion of what companies would like to bank on. Infrastructure spend is more what companies keep an eye on and that is not happening on the ground despite announcements. The market is expecting cement demand to revive on pre-election spending and rural demand following a good monsoon season. The general election is scheduled for Apr-May.
Unlike in the previous two general elections, when there was a strong build up of infrastructure orders, such a build up is absent in the current election cycle. Hence, the general perception that cement demand always improves ahead of elections seems too optimistic to us. We expect the good monsoon season and rural housing schemes to provide some respite for demand but believe that a rebound in demand is likely to lag market expectations. Companies to hike cement price any time from now, as they are looking at improving realisations and margins, but even that looks a distant possibility as of now.
