GOLDEN RULES FOR TRADING

Capital Goods Stocks Outlook for the week – 18 to 22.05.2015

Capital Goods Stocks Outlook for the week – 18 to 22.05.2015
(Seen in range; Voltas results eyed)

Stocks of most capital goods companies are seen trading in a range with a slight negative bias next week amid weak broader market and disappointing result season so far. While short-term investor sentiment remains cautious on most companies in the sector, sector bellwether L&T and product companies such as Voltas and Cummins are preferred.

Tata-sons promoted Voltas will report its Jan-Mar earnings on Thursday. The company's Jan-Mar consolidated net profit seen at 943 mln rupees, down 6.1% on year. Net sales are seen at 15.07 bln rupees, up 3.9% on year. Slower pace of project execution continues to be a challenge, as revenue from project segment declined 16% YoY for 1HFY15 (Apr-Sep), while legacy projects are yet to be commissioned.

In the last one year, stocks of Voltas rose from 154 rupee/share level to 52-week high of 310.3 rupees per share, finally settling at 290.70 rupees yesterday. If the results are better than expectation, shares of the company could cross 52-week high mark in the next week.