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Shares of construction, materials and cement firms rally on Smart City plan

Shares of construction, cement and construction material companies surged as much as 9 per cent in afternoon trade on Thursday after the NDA government announced the first list of 20 cities selected under the flagship 'Smart City' project. The cities named under the plan include Bhubaneshwar, Pune, Jaipur, Surat, Kochi, Ahmedabad, Jabalpur, Vizag, Solapur, Dhawangiri, Indore, New Delhi, Coimbatore, Kakinada, Belgaum, Udaipur, Guwahati, Chennai, Ludhiana and Bhopal. Reacting to the announcement, shares of construction companies such as Supreme Infrastructure, Punj Lloyd, Kaushalya, Prakash Constructions rose up to 10 per cent.

Construction material firms, also, saw an upswing of as much as 5 per cent, led by Gujarat Borosil, Vertical Industries and Oriental Trimex. For minute­by­minute market/stock updates, follow our Twitter handle @ETMarkets Cement companies also gained on hope of a rise in demand in the regions where the smart cities have been proposed. Stocks of companies like Udaipur Cements, Shree Cements, Oriental Veneer Products, Ramco Cements, Burnpur Cements rose up to 5 per cent on the BSE.

Other potential beneficiaries of the government's flagship project such as KEI International, Schneider Electrical, Smartlink Netwrok Systems and NBCC gained up to 5 per cent after the announcement. Many of the midcap and smallcap IT stocks also saw a surge, with Tanla Solutions, Nelco and Kellton Tech Solutions gaining as much as 10 per cent. The government has allocated Rs 48,000 crore for the first batch of 20 Smart City projects. Brokerage firm Equirus Securities in a report in September said: "The idea may not be original, but it comes with a good intent and if the objectives are met even partially, it would be a big leap forward for these smart cities and for the people living in them." The brokerage, though, saw four major challenges to the project, namely, meagre fund allocation, too many cities being designated smart', skepticism of state governments and lack of financial leverage.

Source: Economic Times