GOLDEN RULES FOR TRADING

Capital Goods Stocks Outlook for the week – 01 to 05.02.2016 Seen in range with negative bias

Capital Goods Stocks Outlook for the week – 01 to 05.02.2016
Seen in range with negative bias

Stocks of capital goods stocks are seen trading in range with a negative bias in the
upcoming week, after sector bellwether Larsen & Toubro cut its order inflow
guidance. The company expects its order inflows for 2015-16 (Apr-Mar) to be flat on
year. L&T has already cut its order inflow guidance for 2015-16 to 5-7% in October
from 15% at the beginning of the financial year. The company has guided for a 10-
15% revenue growth in 2015-16. L&T reported Oct-Dec consolidated net profit of
10.35 bln rupees, up 19.42% on year, and higher than analysts' estimates. Net sales for
the quarter ended December were 253.87 bln rupees, up 7.6% on year.

The coming week will also see more capital goods companies reporting earnings--
Crompton Greaves and Cummins posting results on Tuesday, while ABB India to
detail its earnings on Thursday. The Avantha Group-owned Crompton Greaves is
widely expected to report weak quarterly earnings, as its mainstay power equipment
business is likely to continue to be under pressure.

Performance of the overseas business is likely to be volatile, largely given the stated
intent to hive off the businesses; this could impact productivity in the interim,
impacting reported financials. Tulsi Tanti-owned wind turbine maker Suzlon Energy
detailed its Oct-Dec earnings yesterday, reporting a net loss of 1.13 bln rupees,
against analysts' estimates. The company's income from operations for the December
quarter was 18.89 bln rupees, down 61.87% on year.