Cement Stocks Outlook for the week – 23 to 27.05.2016 (In narrow band next week with negative bias)

Cement Stocks Outlook for the week – 23 to 27.05.2016

(In narrow band next week with negative bias)

( www.rupeedesk.in )

Stocks of cement manufacturing companies are seen trading in a narrow band next week with a negative bias given companies' weak Jan-Mar earnings and persistently weak demand. Companies focused on driving sales volume in Jan-Mar, compromising on profitability. Pricing power with companies remains weak in a sluggish market. Cement demand has been weak across the country for the past six to eight months. Drought-like conditions in large parts of the country do not give much hope for a revival at least immediately.

Cement companies' shares are seen bloated at current levels given the weak market fundamentals, and some selling is seen in the near term in counters such as India Cements, JK cement. Positive about stocks of UltraTech, especially given the  company's acquisition of some of Jaiprakash Associates' plants. The additional capacity prepares UltraTech for any spurt in demand. UltraTech is also seen gaining from any demand spurt because the company has strong brand recognition and distribution in large parts of the country.