Cement stocks rally up to 10% on Monday, Ultratech hits record; here's why

Cement stocks: The rally comes amid hopes of sustained push on infrastructure development and government-driven capex continuing in India

Ultratech share hits record high: Cement shares were in demand on Monday with Andhra Cement, Kesoram Industries, Shree Cement, Ambuja Cement, and Ultratech Cement rising up to 5 per cent on the BSE.

The rally comes amid hopes of sustained push on infrastructure development and government-driven capex continuing in India with Prime Minister Narendra Modi taking oath of office for a third straight term.

On June 9, Modi was sworn in, alongside 72 ministers who are yet to be assigned their duties. The 73-year-old Indian leader's Bharatiya Janata Party (BJP) formed a coalition government with several regional parties, including TDP, and JD (U), after the Lok sabha elections of 2024.

Individually, Ultratech Cement rallied 4.2 per cent in the intraday trade to hit an all-time high of Rs 10,908.75. That apart, shares of ACC, Ambuja Cement, Nuvoco Vistas, JK Lakshmi Cement, and Shree Cement gained between 2.7 per cent and 5.4 per cent in the intraday trade. 

Others such as Andhra Cement, Sagar Cements, Anjali Portland, The Ramco Cement, Deccan Cement, and NCL Industries were up in the range of 3.5 per cent and 10 per cent a 2:55 PM. By comparison, the benchmark BSE Sensex was down 0.18 per cent. 

According to analysts at Fisdom Research, no changes are expected in the existing infrastructure plans, but the shelving of non-critical projects is likely. 

"The government will increasingly rely on the private sector, having already implemented significant reforms to encourage private investment," the brokerage said in their post-election note with an 'Overweight' rating on the infrastructure as well as cement sector. 

Those at Motilal Oswal Financial Services, too, believe the government will continue its broad thrust on capex. 

Meanwhile, in the interim Budget for financial year 2024-25 (FY25), the government set aside Rs 11.11 trillion for capex, which is an increase of 11.1 per cent year-on-year.