Grasim, UltraTech: Cement stocks eye up to 10% upside on GST review

Cement shares to stay in spotlight in the coming sessions, post the Finance Minister aimed at weighing reduction of GST (Good and Service Tax) on cement. Any decrease in GST would positively impact the profitability, boosting the overall sector. 

At an event of Confederation of Indian Industry (CII) in New Delhi on Tuesday, the Finance Minister said to examine the current GST of 28 per cent and if required the review will be conveyed to the GST committee. 

Meanwhile,with the exception of UltraTech Cement and Ramco Cements, the share price performance of other cement stocks like Grasim Industries, India Cement, ACC, Ambuja Cements,  JK Cement and HeidelbergCement have been laggard in the recent months. 

So far in this February, Ramco Cements has gained the most by surging 8 per cent, while Ambuja Cements becomes the top loser tumbling over 4 per cent. Grasim Industries and UltraTech Cement have surged 3 per cent and 2.50 per cent, respectively. 

The overall sentiment towards the cement stocks has remained lacklustre amid a gradual decline in their share prices, and a reduction in GST could help to lift this sentiment. 

Here’s the technical outlook of cement stocks amid consideration of reduction in GST:-
 

The Grasim Industries 

Likely target: Rs 1,700 and Rs 1,800

Upside potential: 3.50% to 10%

While there is a “Falling channel” formation, a bearish pattern, on the daily chart of the Grasim shares, the sustainability over the Rs 1,620 could spark a positive reversal towards Rs 1,700-mark. Moreover, both the technical indicators, the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) have formed a positive crossover, suggesting a bullish bias for the immediate trend. The support for the stock exists at 1,600. Once Rs 1,700 is surpassed, the next reach could be to Rs 1,800 levels. CLICK HERE FOR THE CHART

UltraTech Cement Ltd (ULTRACEMCO)

Likely target: Rs 7,900 

Upside potential: 9% 

A positive crossover of the MACD has triggered an upside in the UltraTech cement shares. As long as the support of Rs 7,000 continues to bolster the positive bias, the stock may see a bigger move once Rs 7,400 is taken off. The technical charts are signalling a rally in the direction of Rs 7,900 levels. The recent rebound in the stock reflects its underlying momentum, which sees accumulation at respective support of Rs 6,600 and Rs 6,400 levels. Thus, until these two supports are defended, the medium-term outlook shall see a positive stance. CLICK HERE FOR THE CHART

The Ramco Cements Ltd (RAMCOCEM)

Likely target: Rs 800 

Upside potential: 8% 

Shares of Ramco Cements are poised for a massively breakout once the hurdle of Rs 740 is conquered. When that happens, the stock price action could rally in the direction of Rs 800 levels. The immediate support comes to Rs 700-mark. Once the MACD rises over the zero line, the momentum shall aggressively assists the bulls in taking the rally higher, as per the daily chart. The recent surge in the volumes is of the bullish candles, suggesting accumulation is silently materializing. CLICK HERE FOR THE CHART

India Cements Ltd (INDIACEM) 

Outlook: Needs to cross Rs 200

Post hitting a new all-time high in last September, shares of India Cements have been on a downward trend. So far, the stock has lost 35 per cent from the historic peak of Rs 298.95. At present, Rs 200 has become a major obstacle for the stock and until this mark is not crossed, the counter may remain a laggard. On the downside, a breach under Rs 180 could spark fresh downside towards Rs 155 level.  The 200-day moving average (DMA) is at Rs 210, which once conquered, the stock could realise a shift in sentiment. CLICK HERE FOR THE CHART

Ambuja Cements (AMBUJACEM)

Outlook: Trades below 200-DMA, weak bias

Shares of Ambuja Cement have broken the most significant 200-DMA, positioned at Rs 452-mark. As of now, the stock has a barrier at Rs 400, which not only needs to be surpassed but have to sustain for 4-5 sessions. When that occurs, the stock could eye Rs 452-mark. On the other hand, a breach of Rs 315, its recent reversal mark, could lead to further downside deteriorating sentiment to severely bearish.  CLICK HERE FOR THE CHART