Cement shares in focus; Ambuja Cements up 5%

ACC, UltraTech Cement, Dalmia Bharat and JK Lakshmi Cement trading higher by 2% each on the BSE.

Shares cement companies are in focus with frontline stocks such as Ambuja Cements, ACC, UltraTech Cement, Dalmia Bharat and JK Lakshmi Cement trading higher on the BSE.

Ambuja Cements, the largest gainer among the cement pack, has rallied nearly 6% to Rs 222 on the BSE in intra-day trade after media reports suggest that foreign brokerage Nomura raised rating on the stock to ‘Buy’ from ‘Neutral’. The stock surged 12% from its 52-week low of Rs 198 touched on August 28, 2015.

Meanwhile, most of cement stocks have corrected by 5-28% from the peaks in the last six months owing to weak earnings and challenges in the form of excess capacity.

Prateek Kumar and Nishant Shah, analysts at Antique Stock Broking believe that negatives are largely priced in now and valuation downside is capped.

Cement sector offers a clear proxy to India's infrastructure story and investors should accumulate stocks to ride the demand upcycle.

The sector is all set to enter a cyclical upturn, with a macro-led demand recovery, further complemented by improved demand-supply dynamics led by slowdown in the pace of capacity additions, said analysts in a report dated September 1, 2015.

Dalmia Bharat (up 2.4% at Rs 678), ACC (2.3% at Rs 1,386), JK Lakshmi Cement (2.1% at Rs 354) and UltraTech Cement (2% at Rs 2,928) are other cement stocks trading higher on the BSE.