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Informist, Wednesday, Mar. 25, 2026

MUMBAI – Shares of capital goods companies are likely to fall further next week as the US-Iran war in West Asia is expected to hit demand and lead to higher costs. Further, government expenditure on infrastructure is unlikely to rise sharply and private players may continue to refrain from making big investments in their business due to the uncertainty, analysts said.

"Despite the recovery in aggregate demand to near pre-COVID levels, private capex remains subdued, with capacity utilisation around 75% and elevated inventory levels suggesting limited investment appetite," YES Securities said in a strategy report on Monday. "Companies continue to prioritise cash preservation, partly because pricing power is still muted as revenue growth lags volume growth, limiting the impetus for debt-financed expansion."

Capital expenditure from the government has already slowed after seeing a nearly 40% year-on-year rise in the first half of the financial year. In the first 10 months of this financial year, the government has spent INR 8.42 trillion on capital expenditure, up more than 11% on year.

There is a risk capital expenditure may take a hit as the government may have to support fertiliser and petroleum sectors through subsidies if the Strait of Hormuz remains shut for a prolonged period, analysts said. The government has already reduced excise duty on petrol and diesel, which some estimates suggest could hit government revenue by INR 1.0 trillion-INR 1.5 trillion.

"...the emerging picture (for capital expenditure) is one of continuity rather than inflection," Motilal Oswal Financial Services said in a report on Wednesday. "Private investment, too, is inching forward, though still confined to select pockets. The durability of this cycle will hinge much on global stability as on local intent."

The BSE Capital Goods index ended lower on Friday for the third straight week, falling nearly 7% during this period. This week, the sectoral index was down more than 2% with PTC Industries, Bharat Dynamics, and Mazagon Dock Shipbuilders down 7-10%.

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Following are the resistance and support levels for key capital goods stocks for next week as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anshul Choudhary

Edited by Akul Nishant Akhoury

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