Capital Goods Stocks
Outlook for the week – 19 to 23.09.2016
Seen range bound;
Cummins India in focus
Capital goods stocks are expected to trade within a range
with largely a negative bias next week, in
the absence of significant triggers and a continued bleak
outlook on the sector. So far in 2016-17
(Apr-Mar), capacity utilisation of industries has been lower
than 2015-16, and hence, the capital
goods segment might not do that well in the near to
medium-term.
Stocks of sector bellwether Larsen & Toubro might see a
slight upside in the upcoming week with the
initial public offering of its subsidiary L&T Technology
Services getting subscribed 2.5 times on the
final day. The company received bids for 18.4 mln shares
against 7.28 mln shares on offer.
Analysts have maintained a dull outlook on state-owned
Bharat Heavy Electricals on the back of likely weak operating margins, due to pricing pressure in the
coming quarters. Cummins India could see buying in the short-term, as the company is
"well-placed" to take advantage of the government's
increased emphasis on roads and railways.