This increased Capex in the infrastructure and housing sector, analysts say, will have a multiplier effect
The Union Budget for financial year 2021-22 fired on all cyclinders to kick-start a massive infrastructure drive in the economy. Budget 2021, presented by finance minister Nirmala Stharaman, built further on the government's directive of infrastructure / manufacturing-led economic revival envisaged under the 'Atma Nirbhar Bharat' development model.
Among key announcements, the FM proposed introduction of a bill to set up a financial institution to launch the National Asset Monetisation Pipeline for funding new infra projects; PLI scheme across 13 sectors (announced earlier) with planned expenditure of Rs 1.97 trillion, over 5 years starting FY22; and increase in sops for affordable housing.
This increased Capex in the infrastructure and housing sector, analysts say, will have a multiplier effect as it will create demand across product categories, including steel, cement, and consumer durables. Effectively, cement shares have been on a roll over the past two days. While the stock price of ACC has surged 10 per cent during the period, UltraTech Cement jumped 15.6 per cent. In comparison, the S&P BSE Sensex has gained around 7 per cent.
So, has the Budget thrown open doors for further upside in cement stocks? Here's what charts say:
ACC Ltd (ACC):
Following the recent reversal from lows of Rs 1,600 levels, the stock is aiming to cross the significant resistance of Rs 1,800 levels on the closing basis. Once achieved, the stock may surge up to Rs 2,000 levels over the short-term. Investors need to watch the immediate closing basis support of Rs 1,720 levels to ride the current volatility and sudden movements. The Moving Average Convergence Divergence (MACD) has bounced back from the lows it hit post the recent correction. This reversal over the zero line shows the inherited strength in the stock. CLICK HERE FOR THE CHART
UltraTech Cement Ltd (ULTRACEMCO):
The stock crossed Rs 6,200-mark recently to hit a fresh lifetime high. This up-move is sharp and aggressive, and may inevitably see some profit booking from the immediate scale. However, the overall outlook remains bullish with the stock heading towards Rs 6,500 and Rs 6,700 from a medium-term perspective. The outlook has a closing basis support at Rs 5,800 levels, as per the daily chart. CLICK HERE FOR THE CHART
Ambuja Cements (AMBUJACEM):
After a decisive close above Rs 270 levels on February 2, 2021, the stock has entered a new territory that may see rally towards Rs 300 in the short-term. One can see a trendline breakout at Rs 258 levels, which has strengthened the upside bias, as per the daily chart. A closing basis support stays at Rs 262 mark. CLICK HERE FOR THE CHART
The Grasim Industries Ltd (GRASIM):
A clear sustainability above the resistance of Rs 1,100 has triggered a bullish sentiment on the short-term scale. This upside is heading towards Rs 1,300 with a support of Rs 1,120 levels. The Relative Strength Index (RSI) is firm even in the overbought territory, which means the strength may remain intact in the stock even in a profit booking or selling pressure scenario. CLICK HERE FOR THE CHART
India Cements Ltd (INDIACEM):
As long as the stock doesn't breaches below the support of 50-days moving average (DMA), placed at Rs 159 levels, the stock may see a reversal towards Rs 180 levels. Furthermore, a firm close above Rs 170 may see aggressive build up of a long position, as per the daily chart. The volume scenario is showing a gradual increase which may pick up momentum if the stock manages to close above Rs 170 mark. CLICK HERE FOR THE CHART