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Informist, Friday, Nov. 29, 2024

MUMBAI – Shares of capital goods companies are seen higher next week as the overhang related to assembly elections is behind and analysts expect order inflows to pick up from the December quarter. However, some caution that margin expansion hereon may be difficult and expensive valuations of several stocks in the sector are likely to keep gains limited.

Analysts are positive that order inflow of capital goods companies in the second half of this financial year will be much better, driven by orders from the government. These expectations have found a new life after the Bharatiya Janata Party-led Mahayuti alliance posted a landslide victory in the Maharashtra election last week. After the election results, the BSE Capital Goods index rose nearly 5% this week to close at 70700.26 points.

"The MYA (Mahayuti) win bodes well for MH (Maharashtra), as consolidated Centre + state politics should allow a pick-up in stalled infra development and other pending issues," Emkay Global Financial Services said in a report post-election results.

There are concerns that the government will miss its capital expenditure target for the current financial year as the first half was poor in terms of announcements due to election-related disruptions. Nirmal Bang Institutional Equities Thursday said the central government announced capital expenditure of INR 1.86 trillion in the first half of this financial year, down 21% from a year ago.

However, analysts are not concerned that the government is looking at cutting the pace of capital expenditure. "We might see some of the capex planned for this year being delayed to next year," said a research analyst with a foreign brokerage house. The analyst is extremely bullish on order inflow coming from transmission and distribution segment and said that order inflows from that segment have already picked up.

Some of the defence-related companies were the top gainers this week with Bharat Dynamics and Mazagon Dock Shipbuilders rising 23% and 15%, respectively. Among others, shares of Elgi Equipments, NBCC (India), Welspn Corp., and Siemens rose 10-14% this week.

TOP HEADLINES
* BEML says Chennai Metro contract value INR 36.58 bln, not INR 25.01 bln
* BEML wins INR 25.01-bln contract from Chennai Metro Rail
* KEC Intl gets orders worth INR 17.04 bln in T&D ops from Power Grid Corp
* Earnings Review: Siemens beats Street estimates with PAT rising 45% on year
* IPO Alert: Unimech Aerospace gets SEBI's approval for fresh issue, OFS
* Hitachi Energy consortium with BHEL gets transmission order from Power Grid
* KEC International wins orders worth INR 11.14 bln across four businesses
* RITES gets revised estimate of INR 5.3 bln for ongoing rail-related project
* Praj Ind eyes tripling of revenue on back of new opportunities by 2030

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:

End

Reported by Anshul Choudhary

Edited by Ashish Shirke

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