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Stocks of major cement companies are expected to follow the broader market in the absence of any sector-specific trigger. Even the Interim Budget for 2014-15 on Monday will hardly have any impact on the stock movement of cement companies in particular. The broader market trade will remain rangebound, and any rise will be used to book profits. Being a vote on account, we are not expecting any major steps to be announced. Overall, the government's view on plan expenditure will be in the only thing which market will keep an eye on. The Union government will present vote-on-account for four months on Monday as general elections are due in Apr-May.
Market participants will look out for numbers such as fiscal deficit, gross domestic product growth, and inflation for the next financial year in the Budget speech. Market has already taken into account earnings of cement companies, which analysts say were mostly in line with expectations. Profitability of cement players was muted in Oct-Dec due to flat volumes and average hike in realisations. Cement stocks have sharply under-performed the broader market over the past three months, reflecting earning downgrades as demand failed to pick up despite a favourable base. The past four quarters have been extremely tough for the sector, with dismal demand exerting pressure on realisations. Though a pick-up in demand was expected post monsoon, prompting price increase, but nothing much has change on the ground as construction activity has not picked pace.
Lower operating margins led to a sharp decline of 34% year on year in profit after tax for cement companies, adding with a recovery in pricing from January onwards and a favourable base for volumes, profitability is likely to improve in Jan-Mar.
Stocks of major cement companies are expected to follow the broader market in the absence of any sector-specific trigger. Even the Interim Budget for 2014-15 on Monday will hardly have any impact on the stock movement of cement companies in particular. The broader market trade will remain rangebound, and any rise will be used to book profits. Being a vote on account, we are not expecting any major steps to be announced. Overall, the government's view on plan expenditure will be in the only thing which market will keep an eye on. The Union government will present vote-on-account for four months on Monday as general elections are due in Apr-May.
Market participants will look out for numbers such as fiscal deficit, gross domestic product growth, and inflation for the next financial year in the Budget speech. Market has already taken into account earnings of cement companies, which analysts say were mostly in line with expectations. Profitability of cement players was muted in Oct-Dec due to flat volumes and average hike in realisations. Cement stocks have sharply under-performed the broader market over the past three months, reflecting earning downgrades as demand failed to pick up despite a favourable base. The past four quarters have been extremely tough for the sector, with dismal demand exerting pressure on realisations. Though a pick-up in demand was expected post monsoon, prompting price increase, but nothing much has change on the ground as construction activity has not picked pace.
Lower operating margins led to a sharp decline of 34% year on year in profit after tax for cement companies, adding with a recovery in pricing from January onwards and a favourable base for volumes, profitability is likely to improve in Jan-Mar.
