Credit Suisse sees near-term "headwinds" for the sector due to a slowdown in rural and urban housing, despite the "attractive long-term rural story.

"The investment bank re-starts coverage of the Indian cement sector with an "underperform" rating on ACC and Ultratech Cement and a "neutral“ rating on Ambuja Cement.

Credit Suisse says margins will also "deteriorate" due to an expected 13% rise in power and freight costs on the back of higher domestic coal and diesel prices. The bank also says valuations in the sector "unattractive."

But Credit Suisse makes an exception for India Cements which it rates at "outperform" given its more attractive valuations compared to other stocks in the sector.