GOLDEN RULES FOR TRADING

Capital Goods Stocks Outlook for the week – 04 to 08.04.2016 RBI policy Tue to dictate trajectory

Capital Goods Stocks Outlook for the week – 04 to 08.04.2016
RBI policy Tue to dictate trajectory

The Reserve Bank of India's first bi-monthly monetary policy for 2016-17 (Apr-Mar) to be announced on Tuesday is likely to dictate movement of capital goods stocks next week. Most market participants are hoping for a 25-basis-point repo rate cut by the RBI. Although this has largely been factored in, the announcement is likely boost the sentiment and lead to some gains for indices.

In case the central bank keeps rates unchanged, it will impact capital goods stocks negatively. Ahead
of the policy announcement, the stocks are seen getting a positive push from the 5.7% output growth
in core sectors in February, data for which was released on Thursday.

Among the stocks, technical analysts' favoured are Larsen and Toubro Ltd and Siemens Ltd. One can
go long on these stocks. Larsen & Toubro has announced orders worth 163.4 bln rupees in Jan-Mar till date. The company has given a guidance of 5-7% on-year growth in order inflow, and has garnered 935.2-bln-rupee order inflows in Apr-Dec. State-owned Bharat Heavy Electricals Ltd's stock may move in anticipation of the Jan-Mar results, which will be announced on Thursday.