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Informist, Friday, Aug. 29, 2025

MUMBAI – Shares of capital goods companies are likely to continue to move in a thin range next week in the absence of any major triggers for the sector. Investors will closely monitor the developments related to US tariffs as the huge 50% levy on India is expected to hit the sector in the near term. While there are hopes that the US will likely remove the additional 25% tariff on India for the country's significant Russian crude oil imports, analysts believe it is too early to conclude if the worst is behind for the sector. 

However, the sentiment towards the sector has improved in the near term, particularly after these companies reported robust earnings growth for the June quarter even though tariff policies capped their upside. In the first half of August, foreign portfolio investors net bought capital goods shares worth over INR 11 billion after net offloading shares worth more than INR 6 billion in the second-half of July. 

The government's capital expenditure has not picked up as expected and India-US trade talks have not provided enough cues in favour of the bulls, which has been limiting the rise of capital goods stocks, they said. For the first four months of 2025-26 (Apr-Mar), the government's capital expenditure was INR 3.47 trillion, up almost 33% from the year-ago period, as per data on the Controller General of Accounts' website. 

Motilal Oswal Financial Services said it will continue to monitor the government's capital expenditure for the full year. Order inflow growth for the capital goods sector was mixed, with continued momentum in power transmission and distribution, and renewables, and a gradual uptick in defence, while private capital expenditure remained weak, the broking firm said. 

Its preferred stocks are under key themes such as transmission and distribution, renewable, and defence. However, companies which are heavily dependent on capital expenditure are witnessing delays in order finalisations, the broking firm said in its report Thursday. The capital goods sector is positioned at a juncture where valuation re-rating is difficult from current levels, while growth-oriented stocks will continue to attract investor interest, it 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 Anjana Therese Antony

Edited by Deepshikha Bhardwaj

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