Capital Goods Stocks Outlook for the week – 27 to 30.04.2015
( www.rupeedesk.in )
Stocks
of most capital goods companies are seen trading with a negative bias next week
due to weak sentiment prevailing in the broader market following tepid Jan-Mar
earnings and concerns over minimum alternative tax. Recently, the tax
department has demanded 400 bln rupees from foreign institutional investors as
minimum alternate with retrospective effect.
Also
global cues such as the outcome of the US Federal Open Market Committee's two-day
monetary
policy meeting on Wednesday and progress on Greece's debt talks will keep the
market on its toes.
Capital
goods major Siemens, however, is seen gaining next week as the company's
earnings
announced
yesterday, after market hours, were positive. The company reported Jan-Mar net
profit of 1.62 bln rupees, up 83.4% on year, largely on the back of better
operational metrics.
This
would be a good time for long-term investors to start building positions in
capital goods
companies,
as order from government is seen picking up going forward. Public sector order
inflows play a key role in capital goods sector as a majority of orders come
from the government sector.
State
by state of power plant capacity additions suggests that the state sector power
generation pipeline is modest, supported by Telangana state orders in the near
term. State-owned Bharat Heavy Electricals is seen as the biggest beneficiary
of Telangana order inflows.
