Stocks of most capital goods and engineering companies are seen underperforming next week as most companies are likely to have had lower than expected order inflows in Jan-Mar. Despite attractive valuations, shares of the companies such as Larsen & Toubro and Bharat Heavy Electrical are seen trading with a negative bias.
The fourth-quarter is traditionally a strong one for capital goods companies as a lot of government contracts get sealed. But this has not been the case in Jan-Mar so far. Unless the government spending boosts, shares of these companies are seen falling. There is a strong resistance at 190 rupees for BHEL and at 1,400 rupees for L&T in the short-term.
Crompton Greaves is seen falling further to around 85 rupees as investors remain cautious amid fears the Jan-Mar quarter could be another weak one for
the Avantha Group company. Once the orders come back to the sector, shares of fundamentally strong companies like L&T and BHEL could see some positive traction.
