Meanwhile, the BSE Sensex was up 49.86 points, or 0.27% to 18,609.91

Prism Cement (down 2.93%), Birla Corporation (down 1.69%), Shree Cement (down 0.79%), Binani Cement (down 0.88%), Madras Cements (down 1.93%), India Cements (down 1.89%), and Chettinad Cement Corporation (down 1.36%), edged lower.

But, ACC (up 1.80%), UltraTech Cement (up 0.93%), Ambuja Cements (up 0.55%), extended Tuesday's rally.

Cement stocks saw an across the board surge on Tuesday, 7 September 2010, on reports cement makers have raised prices in South India. Madras Cements (up 14.11%), India Cements (up 9.72%), Ambuja Cements (up 7.81%), UltraTech Cement (up 7.70%) and ACC (up 6.67%), were the prominent gainers in Tuesday's trade.

Cement prices in Chennai have gone by Rs 40 per 50 kg bag to Rs 230 per bag. Cement prices in Hyderabad have been hiked from Rs 130 per bag to Rs 175 per bag.

The pricing pressure were under severe in the Southern region in recent month due to over capacity and decline in demand. The southern region has witnessed the highest capacity addition of 18 million tonnes over the last 15 months, which accounted for close to 30% of all-India capacityaddition during the period. Meanwhile, demand in the major cement consuming state of Andhra Pradesh slowed down due to lower off-take from the housing and infrastructure sectors and reduced government spending. The intensification of monsoon has also affected construction activities.

Analysts reckon that the recent steep hike in cement prices in the Southern region is not sustainable due to adverse demand supply dynamics and expect a Rs 10–15 per bag price correction over the next few days

Over the long term, the government's continued thrust on infrastructure development augurs well for the cement sector in India.

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