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Trading in stocks of capital goods and engineering companies is seen mixed next week with long-term investors picking up stocks of Larsen & Toubro and Bharat Heavy Electricals, which are currently trading at attractive levels. Some mutual funds may be rebalancing their portfolios and they are likely to pick up stocks of companies like L&T and BHEL with a long-term view. These companies have strong fundamentals but are currently trading at a discount. Stocks of Bharat Heavy Electricals could see some marginal gains. A significant uptick in stocks of capital goods companies is unlikely in the near-term as there is no significant improvement in order inflows. In addition to the sluggish quantum of order inflow, capital goods companies are facing stiff competition from Chinese players, which is further squeezing operating margin of these companies.
Stocks of electrical equipment maker Crompton Greaves are seen down. Crompton Greaves' operating margin is likely to see some slight improvement in 2013-14 (Apr-Mar) on the back of the completion of restructuring of its Belgian operations. Stocks of BGR Energy Systems are also likely to trade with a negative bias on Monday as the company has fixed a floor price of 163 rupees for its offer for sale, a discount to yesterday's closing price of 192.95 rupees. Promoter Sasikala Raghupathy of BGR Energy Systems will sell 6.13% stake or 4.42 mln stocks of the company on Monday, in order comply with SEBI's minimum public shareholding norm.
