IT bleeds, cement & aviation rally. Here's why

Shares in cement producers rose after Citigroup upgraded Ambuja Cements, ACC and UltraTech Cement to buy from sell, citing better demand-supply equation and as new plants are more difficult to build.

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The US bank said it saw a potential for 20-40 percent rise in the share prices of the three companies on the back of rising profits.

"The demand supply gap should narrow in favour of producers," it said in a report to clients. "We feel the worst is over." Citigroup said likely government intervention to control prices and the companies' inability to pass on cost increases were risks to its forecast.

At noon, shares in Ambuja Cements were up 2.28 percent, ACC rose 1.05 percent and UltraTech was up 0.41 percent.

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On the other hand, shares of aviation companies rose on mounting expectations their foreign peers will soon be allowed to buy stakes in them, despite the government deferring a decision on this on Thursday.

Under current rules, foreign airlines are barred from buying stakes in Indian carriers, although foreign investors are allowed to hold a cumulative 49 percent. The cabinet approval to the restructuring of national carrier Air India also helped the mood as it accounts for the bulk of the industry's losses.

SpiceJet, which rose 15.5 percent, was the biggest gainer. Analysts say the company would be a preferred partner for foreign airlines once the FDI is allowed, mainly because of promoters' funding support and a cleaner balance sheet. Promoter Kalanithi Maran on Tuesday infused Rs 99.4 crore into SpiceJet.

Shares in Jet Airways rose 3 percent and Kingfisher Airlines 3.6 percent.

Meanwhile, the power sector shares too surged higher after reports showed power generation has expanded by 6 percent March even as 25 thermal power stations operated with coal stock of less than four days. As per Central Electricity Authority data, power generation in March increased by 6.39% to 2,550 million units as against the programmed 2,397 million units.

However, the software and technology counters suffered brutal assault in the session amid expectations that the upcoming results season, which got kicked off by technology giant Infosys' gloomy guidance, may not bring the much-needed cheer to the IT sector amid uncertainty in the business environment for Indian outsourcing companies. Infosys is down 9.17 percent, TCS down 4.69 percent, Wipro down 4.09 percent, HCL Tech is down 2.25 percent

Agencies