Frontline cement stocks can see 10-12% upside

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Frontline cement stocks can see 10-12% upside

Now three quarters down the line cement will go into problems but this is not a sugar kind of a sector where the current scenario is horrible. The current scenario is pretty okay for cement, the future is the problem.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Cement was overdue; we were talking about it three days back that there could be more than a bit of pullback rally because the markets also found its feet once again. This is been a beaten down sector. We are getting close to the Q1 earnings and everything on the street seems to suggest and even the advance tax payments that cement will have another very strong quarter. Now three quarters down the line they will go into problems but this is not a sugar kind of a sector where the current scenario is horrible; I think the current scenario is pretty okay for cement, the future is the problem, said CNBC-TV18's stocks editor, Udayan Mukherjee.

So in the light of what's the reality on ground with prices today you could certainly bargain for a bit more upside for some of the cement counters. As we said before it's difficult to justify a new high for any of the cement companies but we certainly can see 10-12% more in many of the marky names.

Auto is a more difficult call; one was expecting that at some level contrarian buying would come in because these stocks have been hammered out of shape. So there will be a first bounce where the smart guys say - there is value in the auto space and we are willing to live with a pain for six-nine months because these are good companies and the pain might get over three quarters down the line and we will wait patiently because we are getting good valuations.

However the current mood is so bad and the picture, in the next couple of quarters probably, will not be good. So it has to wade through a lot of negative news flow over the next two quarters which means once these kind of contrarian value buys get over you will probably see fresh supply of paper coming in once the news flow turns bad. So I think autos might be a bit stickier; sure they are coming off low bases, they may bounce a bit more but I think once they bounce 5-7-10% more you will probably see some more supply coming.

So you will probably see a lot of resistance for the auto companies on their upward journey and it may not be very easy going but at lower levels for a person with slightly longer-term horizon, I think the smart money is already trying to get into stocks like Tata Motors .