Capital Goods Stocks Outlook
Earnings in focus, valuations only concern
This story was originally published at 22:45 IST on 11 October 2024
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MUMBAI – Analysts are largely positive about Jul-Sept earnings of capital goods companies, which will begin with the results of Polycab India and Elecon Engineering next week. However, high valuations are still a concern and analysts said gains are likely to be muted.
Owing to expensive valuations of several companies in the sector, BSE Capital Goods index has been moving in a range for five months now. The index has gained only 2% since the start of June, underperforming the BSE Sensex, which has gained over 10% during the same period.
Brokerage Nomura Wednesday said margins of capital goods companies are likely to remain high in Jul-Sept amid slight fall in prices of key raw materials like pig iron, aluminium, copper, and zinc. The brokerage noted that product-based companies such as ABB India, Siemens, and Cummins have shown higher pricing power and better product mix. In the case of engineering, procurement, and construction companies, Nomura does not see any major challenges like it did in the previous quarter when there were labour shortages.
Nirmal Bang Institutional Equities also said that execution was strong in Jul-Sept driven by a strong order book. "We continue to remain structurally positive on the sector from a near-to-medium term perspective on the back of robust capex cycle and healthy order inflows," the brokerage said in a report Thursday.
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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Bharat Heavy Electricals | 270.00 | 0.90 | 276.20 | 265.40 |
| CG Power and Industrial Solutions | 858.15 | 19.40 | 894.70 | 818.30 |
| Larsen & Toubro | 3482.55 | (-)0.30 | 3525.70 | 3425.50 |
| Siemens | 7749.90 | 6.90 | 7917.90 | 7474.00 |
| Thermax | 5155.25 | (-)0.70 | 5257.50 | 4998.00 |
| S&P BSE Capital Goods | 71579.87 | 1.80 | 72270.30 | 70809.80 |
| Nifty 50 | 24964.25 | (-)0.20 | 25079.60 | 24862.40 |
| S&P BSE Sensex | 81381.36 | (-)0.40 | 81819.50 | 81085.10 |
End
Reported by Anshul Choudhary
Edited by Ashish Shirke
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