Capital Goods Stocks Outlook for the week-29.02.2016 to 04.03.2016
(Seen
rangebound; FY17 Budget key)
( www.rupeedesk.in )
Shares
of capital goods companies are seen trading in a range with a
positive
bias next week as the recent correction is these stocks is likely to
lend
way to value buying. However, the Budget for 2016-17 (Apr-Mar)
on
Monday is seen setting the tone for the next couple of sessions as the
future
of these investment-hungry businesses will depend a lot on the
outlay
for infrastructure development.
Private
sector capital expenditure, which is one of the biggest
contributors
for the growth of the capital goods industry, is expected to
take
more than a year to revive. As such, the industry is heavily reliant on
government
spending, but limited headroom for public spending may see
some
rationalisation of infrastructure spending by government.
Even
if government maintains its existing investment outlay for the
infrastructure
sector and addresses the inverted duty structure affecting
capital
goods companies, it will be a big sentimental boost for the sector.
Given
the relatively higher base of public capex (capital expenditure)
in
FY 15-16, the government's allocation for public capex will likely be
more
selective in FY 16-17. We believe that government spending will
remain
targeted towards roads, highways, railways, rural infrastructure,
and recapitalisation of public sector banks