Stocks to Buy – Cement sector laggards Ultratech, Ramco poised for gains; buy with short term view, says analyst

Technical Analyst Nilesh Jain picks two stocks from cement sector as his intraday pick for good returns with a short-term view. He said that the sector is doing well with demand for cement only growing stronger. The price of cement has also been revised upwards by most manufacturers and could go up even further if the coal supply constraints sustain. 

His first stock was Ultratech Cement which ended with a positive bias on the BSE on Thursday. The share closed at Rs 7441.95, up 1.1 per cent. It could test levels around Rs 8000 over a positional term period. The short term target price Rs 7700 with a stop loss at Rs 7000.

Jain who is Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking said that the Ultratech stocks witnessed falling channel breakout and is currently treading in oversold category. 

This stock has outperformed the BSE Sensex by over 16 per cent. However, the Year-to-Date (YTD) returns are better at 25 per cent.

Edelweiss sees a buying opportunity as the stock has broken away from the resistance. Though the 1-year returns are at 66.7 per cent, it has been a sector laggard, underperforming by almost 3 per cent.  

However, investors must also weigh the stock on valuation front if they are viewing it from the long term standpoint. At a Price-to-Earnings (PE) of 33.56, BSE’s Markets Mojo rates it “very expensive” against its peers.

The Ramco Cement Limited shares could be a stock to buy for gains, Jain said. This stock has taken support around Rs 930 at least five times, he added. It has now seen a breakout from the descending triangle pattern and the upside is now open for 10 per cent gains from the current levels.  

The stock today ended at Rs 1018.95 on the BSE, down almost by almost Rs 12.35 or 1.20 per cent. The target price is at Rs 1120 while the stop loss is Rs 950.

This stock has been a sector laggard and has underperformed the Sensex by almost 17 per cent. On the YTD basis, it has given 28.6 per cent returns, outperforming the index. It is currently trading above its 5-day, 20-day, 50-day, 100-day and 200-day moving average.