Cement Stocks Outlook for the week – 28.09.2015 to 01.10.2015
Seen
trading in a range on weak fundamentals
( www.rupeedesk.in )
Stocks
of most cement manufacturers are seen trading in a narrow range with a negative
bias next week as a subdued demand scenario continues to keep fundamentals
weak. One
would
be cautious because of demand (lack of it). Q1 (Apr-Jun) saw a revenue growth
of 1% on year (in the sector), and Q2 (Jul-Sep) is also likely to be on the
same lines. Demand is yet to pick up.
As
an external factor, analysts pick the Reserve Bank of India's bi-monthly
monetary policy review as a decisive factor for stock movement. The RBI is
scheduled to detail its fourth bi-monthly monetary policy statement for this
financial year on Sep 29. Analysts see any cut in interest rates as a positive
for cement stocks, as the same would encourage borrowing in the infrastructure
sector.
A
25-basis-point reduction in interest rates is expected, but analysts said only
a 50-basispoint cut would act as a positive. While a 25-basis-point reduction
had been factored in, the reduction would still turn the bias for cement stocks
positive in near term. In terms of sector-specific action, an increase in
cement prices across the northern parts of the country would bode well for
manufacturers. Prices holding on to their levels in other parts of the country
would also act as a positive.
