Capital Goods Stocks Outlook for the week – 11 to 15.01.2016
(In
narrow range with weak bias)
( www.rupeedesk.in )
Shares
of capital goods companies are seen trading sideways with a
negative
bias next week tracking the broader market. Next week will also
see
the release of key economic indicators such as the industrial
production
data for November and consumer price inflation for December
on
Tuesday. These data will be the key trigger for the stocks next week,
coupled
with company-specific development.
Investors
are likely to take short position on these stocks, selling shares
on
every rise, in the run-up of what is expected to be another weak
earnings
season for the sector.
Most
companies are not only likely to report weak topline and
bottomline,
but also weak order inflows. Order flow in the boiler-turbinegenerator
equipment
makers has been extremely low in the first six
months
of the financial year ended September and the trend is seen
continuing
in Oct-Dec as well.
There
have been no major power plant projects announced in Apr-Dec
and
even the tenders for much-talked about ultra mega power projects
have
failed to take off so far.
With
the consumption in the economy yet to show sign of significant pick
up,
revival is private sector capital expenditure is unlikely to pick up
anytime
soon. Shares of sector bellwether Larsen & Toubro that fell 8.5%
in
the last five trading sessions are seen accumulating further next week.
Stocks
of state-owned Bharat Heavy Electricals too are seen falling
further,
but settling in at 144-146 rupees. Even if the shares of the
company
rise, they are unlikely to go beyond 164 rupees in the near-term.