Capital Goods Stocks Outlook for the week – 07 to 11.Jul.2014
Stocks of capital goods companies are seen gaining next week, tracking the wider market,
as the market expects the government to unleash reforms aimed at reviving growth in the
general Budget on Jul 10. Any anti-dumping duty on imported power equipment, if
announced in the Budget, will be positive for companies such as Larsen & Toubro and
Bharat Heavy Electricals.
Further, a higher spending in defence and railways will be a boon for sector majors such as
L&T, Bharat Electronics, and KEC International. We expects the government to extend the
current import duty on power equipment to imported power transmission and distribution
(T&D) equipment as well as continue or extend investment allowance on plant and
machinery capital expenditure.
Providing investment allowance or introducing similar proposals to stimulate economic
revival could provide significant boost for improving corporate capex across industries,
thereby reviving order inflow traction in the capital goods sector. We also see the
government to hike defence spending, augmenting railway infrastructure and undertake
power sector reforms.
Power transmission, alternative energy (esp. solar), railways & urban infrastructure are
areas which could see favourable announcements (leading to demand revival). Any
announcements on manufacturing & Infra sector could also benefit in demand revival for
capital goods companies.
Stocks of capital goods companies are seen gaining next week, tracking the wider market,
as the market expects the government to unleash reforms aimed at reviving growth in the
general Budget on Jul 10. Any anti-dumping duty on imported power equipment, if
announced in the Budget, will be positive for companies such as Larsen & Toubro and
Bharat Heavy Electricals.
Further, a higher spending in defence and railways will be a boon for sector majors such as
L&T, Bharat Electronics, and KEC International. We expects the government to extend the
current import duty on power equipment to imported power transmission and distribution
(T&D) equipment as well as continue or extend investment allowance on plant and
machinery capital expenditure.
Providing investment allowance or introducing similar proposals to stimulate economic
revival could provide significant boost for improving corporate capex across industries,
thereby reviving order inflow traction in the capital goods sector. We also see the
government to hike defence spending, augmenting railway infrastructure and undertake
power sector reforms.
Power transmission, alternative energy (esp. solar), railways & urban infrastructure are
areas which could see favourable announcements (leading to demand revival). Any
announcements on manufacturing & Infra sector could also benefit in demand revival for
capital goods companies.
