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Stocks of most capital goods and engineering companies are seen trading with a positive bias next week as the slide in the rupee is expected to help the sector. Stocks of Larsen and Toubro, and Cummins India are being preferred most by the investors as these companies have significant exposure to exports and are expected to benefit from the fall in the rupee against the dollar. The capital goods players have decent exposure to exports, so the rupee depreciation will actually help them and may also buffer the negativity in revenues due to sluggish orders. Limited or nil exposure to foreign loans will also insulate the industry players from currency fluctuation. The Indian capital goods players are domestically heavy. The international exposure in terms of imports is also very less, so the depreciating rupee will have little or no impact on them. Investors expect weakening rupee to lead to Indian companies preferring to place orders with domestic capital goods companies including Bharat Heavy Electricals, BGR Energy Systems, Thermax and Cummins, over their competitors in China and Korea. The orders placed in China and Korea is in dollar terms, so those imports will get expensive, which will bring back orders to the domestic players. However, in the short term, order booking is not expected to show any dramatic upside. The financial performance of the capital goods players in the country has seen a continuous slide in order book in the last one year, due to increased competition which is affecting margins and profitability.
Stocks of most capital goods and engineering companies are seen trading with a positive bias next week as the slide in the rupee is expected to help the sector. Stocks of Larsen and Toubro, and Cummins India are being preferred most by the investors as these companies have significant exposure to exports and are expected to benefit from the fall in the rupee against the dollar. The capital goods players have decent exposure to exports, so the rupee depreciation will actually help them and may also buffer the negativity in revenues due to sluggish orders. Limited or nil exposure to foreign loans will also insulate the industry players from currency fluctuation. The Indian capital goods players are domestically heavy. The international exposure in terms of imports is also very less, so the depreciating rupee will have little or no impact on them. Investors expect weakening rupee to lead to Indian companies preferring to place orders with domestic capital goods companies including Bharat Heavy Electricals, BGR Energy Systems, Thermax and Cummins, over their competitors in China and Korea. The orders placed in China and Korea is in dollar terms, so those imports will get expensive, which will bring back orders to the domestic players. However, in the short term, order booking is not expected to show any dramatic upside. The financial performance of the capital goods players in the country has seen a continuous slide in order book in the last one year, due to increased competition which is affecting margins and profitability.
