Mumbai, Dec 17: With operators and investors switching their preference from new economy to old economy stocks, the prospect of cement sector stocks has brightened with share prices of some companies in the sector appreciating by over 90 per cent in the last two months. Strong growth in housing and infrastructure sector picking up and better realisation for cement companies after consistent price hike have led to positive impact on already surging stock prices of cement companies in coming days. "Apart from these production cuts by cement manufacturers, lack of capacity addition and higher realisation owing to better prices have added value to cement stocks," said Mr Mehul Dedhia, analyst at Networth Stockbroking Ltd.Cement shares have outperformed the market. During the past two months beginning October 16, the BSE Sensex have risen by only 14.5 per cent from 3,728.70 points to 4,133.50 points on Friday. Leading cement stock prices have appreciated smartly. ACC stock during this period have shot up by almost 92 per cent from Rs 86.60 to Rs 165.80. Grasim Industries stock prices have appreciated by close to 63 per cent from Rs 176.20 to Rs 287.
Although the reason that this trend was ticked off by an improved industry environment, there are several other technical reasons. First cement stocks, hit by regional drought and flood, had been hammered down earlier this fiscal, thus making valuations attractive. Second, with investors preference changing in favour of old economy sector, cement stocks were preferred for the obvious reason of their low valuations.
With construction activity set to improve in the second-half and Prime Minister Office clearing the National Highway Project linking four metros, demand from infrastructure sector may also improve, which may have it's positive impact on cement sector stocks.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.