ACC Ltd., Ambuja Cements Ltd. and other cement makers gained in Mumbai trading after raising prices by as much as 25 percent in southern India on expectations demand will rise following the end of the monsoon.
ACC climbed 6.5 percent to 961.95 rupees at the close, making it the best performer among the 30 stocks that make the benchmark Sensitive Index, or Sensex. Ambuja rose 7.5 percent to 136 rupees and Ultratech Cement Ltd. jumped 7.6 percent to 994.20 rupees. India Cements Ltd. increased 9.8 percent to 116.35 rupees and Madras Cements Ltd. surged 14 percent to 119.25 rupees.
Cement prices have risen about 40 rupees (85 U.S. cents) a bag in the southern state of Andhra Pradesh, Mihir Jhaveri, an analyst at Religare Capital Markets Ltd. in Mumbai, wrote in a research report today. Demand for the commodity may increase in coming months as the construction season begins, he wrote, predicting a 20-rupee increase in the states of Karnataka and Tamil Nadu.
Builders and real-estate developers typically halt work during the peak of the monsoon, which the India Meteorological Department said is 100 percent of the 50-year average this June- September season, a level considered normal. Rain-bearing clouds will start to withdraw only in the second half of this month, according to the forecaster.
Receding rains may “result in some improvement in prices across the country as demand moves into double digits,” wrote Jhaveri, who recommended investors “accumulate” cement stocks over the next two months as most of the “bad news gets factored into the price.”
Cement prices have increased by 30 rupees to 40 rupees a bag effective today, Venkatesware Rao, area manager for Andhra Pradesh at India Cements said in a telephone interview.