GOLDEN RULES FOR TRADING

Capital Goods Stocks Outlook for the week – 14 to 18.12.2015 (seen weak next week)

Capital Goods Stocks Outlook for the week – 14 to 18.12.2015
 (seen weak next week)

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.