Capital Goods Stocks Outlook
Seen higher on strong demand for pdts
This story was originally published at 22:13 IST on 30 August 2024
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MUMBAI - Shares of capital goods companies are seen higher as strong demand seen across the sector is likely to drive earnings growth. However, expensive stock valuations may limit the upside.
"Demand across sectors remains healthy, with the oil & gas sector leading the way," Elara Securities said, based on its interaction with industrial automation firms during an event. "It will benefit from huge capex (capital expenditure) plans announced by public as well as private companies in the oil & gas industry. Other sectors with rising demand include pharmaceuticals, steel, cement, renewables, plastic, chemicals and heavy industries."
Other brokerages held similar views around the sector. Prabhudas Lilladher in its strategy report said order enquiries were healthy across segments such as defence, data centres, green energy, and power transmission and distribution, among others.
Valuations remain the only major pain point for analysts. In one case, Apar Industries has risen above Nirmal Bang Institutional Equities's target price and the brokerage now expects a slight downside because of the sharp run-up. At the same time, the brokerage considers the stock a "long-term compounder" and advised investors to accumulate at every dip. The brokerage has a target price of 8,700 rupees for Apar Industries, while the stock closed at 9,163.50 rupees today.
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Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Bharat Heavy Electricals | 290.55 | (-)1.90 | 295.00 | 287.60 |
| CG Power and Industrial Solutions | 696.10 | (-)7.20 | 721.90 | 678.60 |
| Larsen & Toubro | 3704.65 | 3.00 | 3784.00 | 3626.80 |
| Siemens | 6893.10 | (-)1.80 | 6977.00 | 6815.00 |
| Thermax | 4372.80 | (-)2.40 | 4500.50 | 4266.10 |
| S&P BSE Capital Goods | 73169.37 | (-)0.30 | 73983.20 | 72271.20 |
| Nifty 50 | 25235.90 | 1.70 | 25303.50 | 25165.60 |
| S&P BSE Sensex | 82365.77 | 1.60 | 82800.60 | 82038.60 |
End
Reported by Anshul Choudhary
Edited by Rajeev Pai
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