FPIs raise bets on cement counters | Economic Times

ET Intelligence Group: Cement stocks are emerging as a preferred bet for foreign portfolio investors (FPIs) following improving volume visibility and price discipline by cement companies. The value of their cement portfolio increased by 46 per cent in the year-to-date (YTD) period. It outpaced their other portfolios including automobiles, consumer durable and household products. This also raised their allocation to the construction materials sector to 2.3 per cent in July from 1.9 per cent two years ago, according to the data from NSDL.Cement companies have been able to pass on the increase in raw material prices amid stable demand. Their average operating profit was at nearly a decade high of Rs 1,500 per tonne in the June 2021 quarter. Increasing infrastructure investment by the government and private sector improves the demand visibility for cement makers.The portfolio value of FPIs rose by 20 per cent YTD to $ 618 billion (Rs 46 lakh crore). This is nearly one-fifth of India’s total market capitalisation. While favouring the cement counters, FPIs reduced exposure to automobile and personal products by 13-48 basis points in the current year till July. The weight of the automobiles sector in their portfolio dropped to 4.2 per cent from the peak of 5 per cent in October 2020. The profitability of consumer discretionary companies is under pressure because of inflation and weak demand. The operating margin of Maruti Suzuki India, the country’s largest carmaker, hit a multi-year low of 4.6 per cent in the June 2021 quarter.