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Stocks of capital goods and engineering companies are seen up in the first half of next week on positive sentiment, but likely weak Jan-Mar earnings from Crompton Greaves and profit booking could erase the gains. Stocks of most capital goods companies ended up yesterday on talks of likely improvement in order inflow from state-owned companies. Some also reacted positively to talks that their promoters would either announce a share buyback or delisting plans. Thermax and Larsen & Toubro are among the most preferred stocks by investors. Thermax is expected to report strong earnings on improved order inflow. Thermax has created capacities at a time when the industry has been lagging. Thermax's positive earnings will benefit the sector.
Investors expect L&T to meet its order inflow guidance. L&T and Thermax will detail Jan-Mar results on Wednesday. A strong support is seen for L&T at 1,580 rupees and resistance is seen at 1,660 rupees. Support for Thermax is at 602 rupees, while resistance is seen at 629 rupees. Investments have started to look up a bit. The sector as a whole may begin to show positivity in next few quarters. The key data points to watch out would be the order inflows going forward and the balance sheet position of these companies, particularly on the working capital side.
