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Informist, Friday, Apr. 4, 2025

MUMBAI – Shares of companies in the capital goods sector are expected to rise next week as they have limited exposure to the US market at a time when tariffs may hurt export-oriented companies. Most of the companies in the sector derive 80% of their revenue domestically, Geojit Investments said in a report.

Only a few stocks in the sector, such as Timken India, are not shielded from the tariffs, an analyst at a research firm said. Nearly 20% of the revenue of Timken India comes from the US, according to the Geojit's report. However, stocks such as Siemens and Hitachi Energy India have minimal exposure to US and are better shielded, the analyst noted. Other companies dealing in forgings and bearings might have some impact as these products form the majority of engineering goods exported to the US, the analyst said.

The reciprocal tariffs might not have a direct impact on the capital goods sector, but the only concern is if other countries retaliate by raising tariffs, it will impact the global supply chain, another analyst at a separate domestic brokerage said. This will increase the cost of goods, indirectly affecting the companies in the sector.

On March quarter earnings, the analyst said capital goods companies likely witnessed a pickup in their order inflows and execution of orders is better compared to the previous quarter. "Forward looking statements regarding concerns around retaliatory tariffs by other countries will be more in focus than just earnings," he added.

Stocks in the sector were hit this week on concern around whether other countries would also impose retaliatory tariffs, the analyst said. BSE Capital Goods lost nearly 5% this week to close at 59643.57 points. Almost all the index constituents fell this week, with Bharat Forge, Timken India, and CG Power, Sona BLW Precision Forgings, Praj Industries, and ABB India down 8-12%. Bharat Dynamics and GMR Airports, on other hand, rose 4.5% and 6.8%, respectively, this week.

As the government is shifting focus to in-house manufacturing of train sets, only companies engaged in supplying components and propulsion systems to the Indian railways, such as ABB India, Siemens, and CG Power, are expected to benefit, Nuvama Institutional Equities had said in a report on Tuesday. The brokerage expects the next large train order to be of INR 300 billion for supplying products for 250 trains, the report said.

The Cabinet Committee on Economic Affairs has approved four railway projects with a total cost of INR 186.58 billion, the government said in a release on Friday. The four projects will increase the existing network of the Indian Railways by about 1,247 kilometres, the government said.

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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:

End

Reported by Aman Aryan

Edited by Subhojit Sarkar

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