• PAGE ONE
• INDEX
• HOME

Bull charge at cement counter

Archana Chaudhary

MUMBAI, Dec. 14

THE bullish sentiment in the cement sector pushed up the share prices of many cement companies on the bourses even as major stock indices fell today. Cement stocks rose as many companies resorted to a substantial product price hike over the last few week s. But the analysts have a word of caution, as the trend may not last too long.

Bulls charged on the Larsen & Toubro counter, which climbed to Rs 210.20, up Rs 6.60 from previous close, while India Cements gained Rs 6.10 to close at Rs 52.45 on the BSE today. The shares of ACC and Gujarat Ambuja too, went up by Rs 2.70 and Rs 1.95, to close at Rs 165.80 and Rs 166.75 respectively.

``The recent hike in cement prices by Rs 5 per bag has led to the boost in stock prices,'' an analyst said. Cement prices have firmed up on the back of a supply squeeze by the cement cartel and not due to any major revival in demand, analysts said.

The price rise, however, is not in tandem with the growth in sales volumes and this may pull down stock prices in the coming weeks, analysts say.

The third and fourth quarters of a fiscal year generally boost cement sales because of the post-monsoon season coupled with festivities. This year, however, sales growth in November was marginal after the sudden spurt in October.

``Though there has been an overall rise in cement stock prices, we are not bullish on the sector. This spurt in stock prices will be short-lived unless sales volumes pick up to complement the price hike. Most of it is only speculative buying,'' Mr Mayur Shah, Milan Mahindra Securities, said.

ACC shares seem to have shot up following speculative purchases by traders expecting an open offer to be made by the Gujarat Ambuja at Rs 370 per share. ``Expectations of an open offer has pushed up the price of this stock,'' Mr Avinash Gorakshakar, anal yst at Emkay Shares and Stocks, said.

After tech stocks were hammered on the bourses in the last few weeks, a large chunk of funds have been diverted to old economy stocks. Cement stocks may have benefited as a result.