Cement stocks in focus: Price hikes, strong demand & Q4 optimism among key triggers to watch out

Cement stocks gained momentum last week, with shares of Ambuja Cements, Shree Cement, UltraTech Cements, and ACC rising 3% to 4%. The rally was driven by optimism ahead of the Q4 earnings season.

The cement sector is expected to see higher realisations in Q4, driven by recent price hikes. Experts say these increases have been absorbed without a major drop in demand, which could boost Q4 earnings.

Looking ahead, street expects demand to recover in the second half of FY25, supported by higher government infrastructure spending after the elections.

The sector will also benefit from industry consolidation due to mergers and acquisitions, along with cost reductions from greater use of renewable energy and lower freight costs as companies shift to rail transport.

Stocks in focus in the near-term

• Ramco Cements: Shares of Ramco Cements jumped over 1.5% on Friday after reclaiming its 21, 50 and 200-day exponential moving averages. It formed a bullish engulfing pattern on the daily chart on 27 March. The bullish reversal pattern was confirmed after the close of the subsequent candle was above the high of the engulfing pattern.

• ACC Ltd: ACC shares gained 1.4% last week, reclaiming their 21- and 50-day exponential moving averages (EMAs) on the daily chart—a sign of buying interest at lower levels. In the coming sessions, traders should watch ACC’s price action around these EMAs. A close below this zone could indicate weakness, while holding above it may lead to further gains toward the 200-day EMA.

• Ambuja Cements jumped nearly 5% last week and continued its bullish momentum for the second consecutive week. However, it faced resistance around its 200-day EMA and failed to capture the crucial level on a closing basis. After last two week’s sharp momentum, traders can monitor the price action of Ambuja Cements within the range of ₹561 and ₹500. A breakout of this range will provide traders further directional clues.

Bullish outlook on Ramco, ACC and Ambuja Cements

If you expect Ramco Cements, ACC and Ambuja Cements to maintain their bullish momentum, a long call strategy could be a viable option. Let's take Ramco Cements as an example.

The options contracts of Ramco Cements expire on Thursday, 24 April. On Friday, Ramco Cements closed at ₹896, making the at-the-money (ATM) strike price ₹890. Buying an ATM call option sets your breakeven point at ₹925 - about 3.6% above Friday's close. The trade becomes profitable if Ramco Cements rises above this level.

Bearish outlook on Ramco, ACC and Ambuja Cements

If you expect a change in trend in Ramco Cements, ACC and Ambuja Cements in the short-term, a long-put strategy could be an effective approach. Let’s use Ambuja Cements as an example.

On Friday, Ambuja Cements closed at ₹538, making the at-the-money (ATM) strike price ₹540. Buying an ATM put option with a April 24 expiry sets the breakeven at ₹523—2.9% below Friday’s closing price. The trade becomes profitable if Ambuja Cements falls beyond this level.

Conclusion

In summary, a long-put strategy benefits if the share price declines, while a long-call strategy enables traders to profit from upward moves. Options offer the flexibility to capitalise on different market conditions—whether bullish, bearish, or range-bound. However, past performance does not guarantee future results. It’s essential to evaluate risks carefully and have a well-defined risk management plan before executing any strategy.