Capital Goods Stocks Outlook
Seen under selling pressure on margin concerns
This story was originally published at 19:58 IST on 21 August 2026
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MUMBAI – Shares of capital goods companies are likely to remain under selling pressure as high crude oil prices continue to threaten these companies' margins. Several companies reported a hit to margins during the June quarter, and this could continue if the Strait of Hormuz does not reopen soon.
"Overall margins missed our estimates at 11.7% (vs estimated 12.4%)," Motilal Oswal Financial Services said in a report on June quarter earnings of the capital goods sector. "Margin pressure remained for most of the companies, with commodity cost volatility, higher freight costs, adverse product mix and elevated execution costs limiting near-term expansion."
With crude oil prices still high and no clarity on a peace deal between the US and Iran, analysts are concerned that high costs may hit margins going forward or limit any expansion in margins. "While scale benefits and operating leverage are expected to provide some support, margin recovery is likely to remain gradual," Motilal Oswal said.
While demand has largely been strong in the June quarter, with most companies reporting better-than-expected earnings, there are worries that order inflows may slow due to ongoing tensions between the US and Iran. "... overall investment demand could turn sluggish over the next few quarters as... the central government may have to moderate capex to manage additional stress on the fiscal from high crude oil prices," Kotak Institutional Equities said in a note.
Further, several companies in the sector are trading at expensive valuations, which would limit upside. High stock valuations have hit returns recently, with the BSE Capital Goods index still down 6.6% from its 52-week high. The sectoral index fell 0.6% this week after gaining 4% in the two weeks preceding that.
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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:
| Company | Price | Week-on-week change in % |
Resistance | Support |
| Bharat Heavy Electricals | 413.00 | (-)2.10 | 420.50 | 405.40 |
| CG Power and Industrial Solutions | 867.00 | (-)2.60 | 886.90 | 855.00 |
| Larsen & Toubro | 4,093.00 | 0.90 | 4,123.40 | 4,046.20 |
| Siemens | 3,920.00 | (-)0.50 | 4,000.10 | 3,839.90 |
| Thermax | 3,967.80 | (-)1.90 | 4,103.70 | 3,887.10 |
| Bharat Electronics | 414.00 | 0.80 | 420.20 | 405.60 |
| Index | Levels | |||
| S&P BSE Capital Goods | 79219.75 | (-)1.10 | 79770.70 | 78826.90 |
| Nifty 50 | 24252.00 | (-)0.50 | 24324.90 | 24170.40 |
| S&P BSE Sensex | 77540.83 | (-)0.60 | 77850.60 | 77291.00 |
End
US$1 = INR 95.69
Reported by Anshul Choudhary
Edited by Saji George Titus
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