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Stocks of most capital goods and engineering companies are likely to track the broad market, while investors may cherry-pick stocks based on valuations and company-specific news. Outlook on the sector continues to be grim as fundamental issues regarding land acquisition, high interest rates, environmental and forest clearances, paucity of orders, and aggressive competition, remain unresolved.
India's industrial output data for September was also disappointing, with capital goods sector contracting 12.2% against a 6.5% contraction during the same period a year ago, reflecting the investment slowdown in the sector. This was the seventh consecutive month that capital goods' output has contracted on a year on year basis.
Industrial production in September unexpectedly contracted 0.4% led by the beleaguered capital goods sector. Industrial output had grown 2.3% in August. Jul-Sep earnings will continue to drive movement in stocks. Stocks of Siemens will be in focus towards the end of next week as the company will detail its fourth-quarter results on Nov 23.
