Capital Goods Stocks Outlook – 26 to 30.05.2014
(www.rupeedesk.in)
Next week, investors are likely to remain bullish on most capital goods sector stocks,
especially those catering to power sector, in the anticipation that the new central
government may announce policy for revival of power sector. We are positive on L&T
due to improvement in macro-economic parameters and potential uptick in the
investment cycle, the new government having to carry on the process initiated by its
predecessor, also given growth imperative and market feedback and limited downside in
valuations with the stock trading at 15 times (core earnings).
Despite the positive sentiment in the market regarding capital goods, most companies in
the sector are seen reporting lower-than-last year profits. Capital goods and infrastructure
sector major L&T will detail their Jan-Mar earnings on May 30. First resistance for the
shares of the company is seen at 1,560 rupees, while the second is seen at 1,600 rupees.
Among the other company's detailing Jan-Mar earnings next week are electrical
equipment maker Crompton Greaves, power distribution infrastructure maker Kalpataru
Power Transmission, Thermax and consumer goods company Voltas.