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Informist, Friday, Aug. 22, 2025

MUMBAI – Shares of capital goods companies are expected to move in a thin range in the near term as market participants assess the impact of US tariffs ahead of Aug. 27 deadline. Technically, the BSE Capital Goods index is expected to maintain its sideways trend in the coming week.

Most analysts believe the US tariffs are unlikely to have a major impact on the sector, as only a few companies have substantial exposure to the region. For most domestic capital goods firms, exports to the US account for just about 2% of their total sales, said Harshit Kapadia, vice-president at Elara Securities.

S&P Global Ratings, however, expects exports of Indian capital goods to face the "toughest adjustment" with the implementation of the US tariffs. In a press release Friday, the global ratings agency noted the impact of the 50% tariff on Indian imports to US will not be uniform and exports of capital goods, chemicals, automobiles, and food and beverage would face the toughest adjustment. With the US being the largest export destination for Indian capital goods, exporters would struggle to redirect products to other markets, the ratings' agency said. 

The BSE capital goods index has been trading in a narrow range for the past couple of weeks, said Vipin Kumar, derivative analyst Globe Capital Market, adding that going ahead, it would likely to continue its sideways trend till the 66000-69000 range. Kapadia attributes the sector's weakness to expensive valuations of the stocks, mixed June quarter earnings, and the lack of a pickup in private capital expenditure."

"We remain selectively positive on stocks tied to power generation, RE (renewable energy), T&D (transmission and distribution), railways, data centres and electronics, backed by robust order inflows or execution and higher margins," Nuvama Institutional Equities said in report Wednesday. However, other sectors at large may face near-term challenges until private capital expenditure broadens, it added. While the brokerage remains selectively optimistic on the expansion of public capital expenditure, it believes that the pickup in private capital expenditure is still limited to new-age areas such as green hydrogen, electronics, and data centres. 

Analysts expect the anticipated goods and services tax rationalisation to have no direct impact on the sector, as its growth remains largely tied to an increase in capital expenditure. However, they do not rule out an indirect boost from improved consumption, which could support demand.

The BSE capital goods index rose marginally over the week, with four of the six constituents declining on a week-on-week basis. This is the second straight week of marginal rise after falling for five straight weeks. Next week, the index is seen finding support at 66732.50 and resistance at 67861.60. 

TOP HEADLINES

* S&P sees US double tariff hitting Indian capital goods, auto exports
* IRCON Intl gets INR-5-bln order to build residential schools in Meghalaya
* Titagarh Rail gets INR 4.7-bln order from Garden Reach for shipping vessels
* Delhi HC sets aside arbitral award asking BHEL to pay money to Chinese co
* Promoter Kochuouseph sells 1% stake in V-Guard Ind via block deal
* IPO Alert: Vikran Engg sets IPO price band at INR 92-INR 97 per share
* NCLT admits SBI's insolvency plea against RInfra arm SU Toll Road
* KEC Intl gets orders worth INR 14.02 bln across various businesses
* Rail Vikas Nigam gets order worth INR 1.79 bln from IRCON International

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 Arya S. Biju

Edited by Subhojit Sarkar

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