Capital Goods Stocks Outlook For The Week – 26 To 29.12.2017

Capital Goods Stocks Outlook For The Week – 26 To 29.12.2017

             Equity Cash/Futures/Options Segment 

Stocks of capital goods companies are seen rising further next week tracking the trend in broader market. Benchmark indices are seen extending gains next week. The BSE Capital Goods Index rose 4.4% this week. Most capital goods companies are expected to gain slightly in coming weeks as an increase in the Government spending and a revival in rural economy could help the sector. The central government is expected to pay more attention to the rural economy and agriculture in the Union Budget for 2018-19 (Apr-Mar). Focus will be on stocks of Bharat heavy Electricals Ltd, Siemens Ltd, and Havells India are seen positive in the near term. BHEL is seen positive in the
near term as orders from thermal power plants are expected to pick up with government monitoring. The country-level thermal plant load factor, which is currently at 60%, is seen improving. Plant load factor is the capacity utilisation level of a power plant and higher factor indicates increased
demand which is beneficial for capital goods companies present in power sector equipment manufacturing and supply. BHEL is also the lowest bidder in 5.8 GW of orders from power generators, and its order book as of October end was 970 bln rupees. The Siemens, we expect to benefit from its advancement in digitalization services, healthy order book, and infrastructure available to compete aggressively for upcoming orders. Havells India is also positive due to the
company's planned expansion across all major businesses, new product launches, and entry into new segments. Stock of Tata Power may gain as the company's arm has received a licence for thermal coal mining in Russia.

Source : Cogencis Information Services Ltd.

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