GOLDEN RULES FOR TRADING

Capital Goods Stocks Outlook for the week – 04to 08.07.2016 (Seen range-bound with a positive bias)

Capital Goods Stocks Outlook for the week – 04to 08.07.2016
(Seen range-bound with a positive bias)

The stock of capital goods companies are expected to trade range-bound with a positive bias next
week, with the announcement of companies earnings for Apr-Jun nearing, and the impact of Brexit
largely factored in. Most capital goods companies will detail their Apr-Jun earnings in the second half of July, and management commentary would be a key trigger in the near term. The fallout of Brexit has mostly been factored in, as far the wider market is concerned. Sector major Larsen & Toubro is likely to gain next week, with the announcement of its subsidiary Larsen & Toubro InfoTech’s initial public offering. The offer will be open for subscription during Jul 11-13.

This week, the stock surged over 7%, tracking the broader market. In the next few weeks, it could test the 1,600-rupee level, another technical Crompton Greaves is seen positive in the short term, with an upside target of 85-90 rupees a share, riding on the Avantha Group-owned company's recent announcement of selling its global automation business, ZIV, by September. the management of
Crompton Greaves gave strong growth guidance for the industrial vertical, which would push the stock higher. Shares of state-owned Bharat Heavy Electricals Ltd are expected to continue the uptrend and rise to 140 rupees in the short term. The stock has risen nearly 11% in the last three sessions, primarily because it was undervalued.