Stocks of capital goods and engineering companies are likely to track the market next week, which seen moving in a tight range. With the earnings season over and not much of action happening, these counters are expected to move in tandem with the broad market. Traders see the National Stock Exchange's 50-scrip Nifty in the band of 5300-5450 next week, with low volumes due to subdued foreign investor participation.
Market participants said contraction of the capital goods sector as reflected in the latest industrial production data will continue to be an overhang on these stocks. India's industrial output contracted for the third time in four months in June, shrinking 1.8% in the month.
Traders see no near-term respite from the Reserve Bank of India through softening of interest rates, which will keep the pressure on capital goods and engineering companies. While fresh order flows have trickled down from most of the sectors, there has been active tendering for electrical equipment, especially reactors and transmission lines.
In the reactor segment, however, there is stiff competition from the Chinese players that poses risk to pricing and margins. Siemens India and Crompton have not won any orders in this segment from Power Grid in last four months.
We continue to prefer exposure to the transmission sector, as demand from both domestic and international markets is likely to remain robust. However, foreign competition continues unabated in the substation/equipment segment, posing continued risk to pricing and margins.
www.rupeedesk.in
Market participants said contraction of the capital goods sector as reflected in the latest industrial production data will continue to be an overhang on these stocks. India's industrial output contracted for the third time in four months in June, shrinking 1.8% in the month.
Traders see no near-term respite from the Reserve Bank of India through softening of interest rates, which will keep the pressure on capital goods and engineering companies. While fresh order flows have trickled down from most of the sectors, there has been active tendering for electrical equipment, especially reactors and transmission lines.
In the reactor segment, however, there is stiff competition from the Chinese players that poses risk to pricing and margins. Siemens India and Crompton have not won any orders in this segment from Power Grid in last four months.
We continue to prefer exposure to the transmission sector, as demand from both domestic and international markets is likely to remain robust. However, foreign competition continues unabated in the substation/equipment segment, posing continued risk to pricing and margins.
www.rupeedesk.in
