Capital Goods Stocks Outlook for the week – 14 to 18.12.2015
(seen weak next week)
( www.rupeedesk.in )
Stocks
of capital goods companies are seen weak next week as concerns over
continued
sluggish order inflows and delays in payment cycles are likely to
weigh
on the near-term earnings of these companies.
Government
spending so far has been concentrated on roads, while order
inflows
in other key sectors like power and railways are yet to pick up.
For
the next three-four quarters, most capital goods players are seen reporting
weak
earnings. According to government data released Friday, India's industrial
growth
rose to a five-year high of 9.8% in October and the output of capital
goods
and consumer goods, considered indicators of investment and consumer
demand
in the economy, grew 16.1% and 18.4%, respectively, during the
month.
An
industry official has said the industrial production numbers are
"surprising"
given
that little has changed on the ground. Market participants too feel that the
industrial
production figures may not have any significant impact on the stocks
in
the sector.
The
industrial production numbers have been fluctuating for a while now and
given
the low base effect, these numbers do not mean much.