Capital Goods Stocks Outlook
Seen in range due to high stock valuations
This story was originally published at 20:11 IST on 27 December 2024
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MUMBAI – High stock valuations are likely to limit gains in capital goods companies next week despite some corrections in the past two weeks. Analysts expect muted gains despite expectations of sustained growth in earnings on the back of capital expenditure by the government.
Nirmal Bang Institutional Equities Thursday said execution by capital goods companies under its coverage was robust during the December quarter. They expect the operating margins of companies to increase year-on-year on lower raw material costs, better operating leverage, and lower freight costs. The brokerage's coverage includes Thermax, Triveni Turbine, KEC International, Apar Industries, Power Mech Projects, and Solar Industries.
Motilal Oswal Financial Services on Monday said demand for generators has recovered this month from the weakness in October and November. "This weakness was more pronounced in the low-to-mid kVA (kilo volt amperes) ranges, which are price-sensitive and have much higher competition. Higher kVa ranges are still witnessing normal demand," the brokerage said.
The BSE Capital Goods index fell 0.6% this week on top of an over 6% decline in the previous week. Titagarh Rail Systems was the worst-hit stock in the sector this week, falling over 12%, followed by Thermax and Siemens with nearly 6% and 5% fall, respectively.
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* Defence min inks INR 76.29 bln contract with L&T to procure guns for army
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 | 235.40 | 0.00 | 245.50 | 229.70 |
| CG Power and Industrial Solutions | 748.25 | 2.50 | 758.00 | 738.20 |
| Larsen & Toubro | 3608.10 | (-)0.60 | 3658.60 | 3578.30 |
| Siemens | 6546.00 | (-)4.70 | 6853.80 | 6368.30 |
| Thermax | 4386.25 | (-)5.70 | 4546.00 | 4285.20 |
| Bharat Electronics | 292.05 | 0.40 | 298.00 | 288.40 |
| S&P BSE Capital Goods | 68160.15 | (-)0.60 | 69032.00 | 67671.40 |
| Nifty 50 | 23813.40 | 1.00 | 23989.20 | 23712.70 |
| S&P BSE Sensex | 78699.07 | 0.80 | 79224.90 | 78335.70 |
End
US$1 = INR 85.53
Reported by Anshul Choudhary
Edited by Saji George Titus
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