GOLDEN RULES FOR TRADING

Capital Goods Stocks Outlook – 06 to 09.09.2016 Seen range bound, bias negative

Capital Goods Stocks Outlook – 06 to 09.09.2016
Seen range bound, bias negative

In the forthcoming week, stocks of capital goods companies are likely to trade within a range with a
negative bias in the absence of near-term triggers, and recent rating downgrades on a couple of
companies in the sector. Sector bellwether Larsen & Toubro may see some stock-specific action next
week, with L&T Technology Services Ltd--its wholly-owned subsidiary--set for an initial public
offering, which opens for subscription on Sep 12. The offer will close on Sep 15. The company has
set the price band for its 10.40-mln-share initial public offer at 850-860 rupees a share.

UDAY (Ujwal DISCOM Assurance Yojana) led benefits are now expected to be long drawn. Also
margin profile will remain lumpy given sale of various businesses and related costs. Crompton
Greaves' recent run-up caps near-term upsides. However, analyst said he was optimistic about the
Avantha Group Company’s industrial growth in the short term, owing to its favourable positioning in
low-tension/high-tension motors. State-owned Bharat Heavy Electricals is unlikely to gain much next
week.