Capital goods stocks surged upto 9 per cent on Wednesday, in an otherwise flat market, on hopes a new government with majority seats will look into the problems plaguing the sector for long.
While five of BSE capital goods stocks hit their 52-week high during the day, stocks such as Larsen & Toubro and Crompton Greaves inched closer to their one year high at Wednesday’s close.
The BSE capital goods index rose 118.84 points, or 1.13 per cent, to close at 10,592, which was just short its 52-week high of 10,601.79, its hit in December last year. The index, meanwhile, was still quoting 49 per cent lower than its all-time highs of November 2007.
The capital goods index has risen 12.67 per cent in the past one year and is up around 54 per cent from its August 2013 lows.
The index has registered best returns after BSE IT (up 41.32 per cent), BSE healthcare (34.09 per cent), BSE auto (16.41 per cent) and BSE FMCG index (15.26 per cent) in the past one year.
The election commission on Wednesday announced a nine-phase election
starting April 7.
ABB India surged 8.82 per cent to Rs 795. The stock hit its 52-week of Rs 803.20 during the day. Fag Bearings, SKF India, Thermax and Va Tech Bag also hit their 52-week high during the day.
Va Tech Wabag, Alstom India, IL&FS Transportation and Bharat Electronics jumped 6.78 per cent, 6.65 per cent, 5.38 per cent and 4.85 per cent, respectively.
Thermax, Fag Bearings and Siemens also gained between 3.38 per cent and 4.71 per cent. SKF India ended 0.29 per cent lower at Rs 736.20.
“Capital goods stocks have been beaten-down in the past, but are attracting buyers these days largely on hopes that the investment cycle will pick up and order flows would start flowing in as the new government comes into power,” said Rikesh Parikh, AVP at Motilal Oswal Financial Services.
The government has recently cut excise duty for the capital goods sector to 10 per cent from 12 earlier, which has also supported these stocks.
“In the run-up to the general election, the IT and pharmaceutical stocks, and some of the select bottom-up stocks would continue to outperform, though there is growing interest in the cyclical sectors. The ideal strategy would be to increase one’s exposure to quality
names in the capital goods and engineering companies (eg Larsen and Toubro, Crompton Greaves, Bajaj Electricals and CESC and the private sector banks during corrections,” said Sharekhan in a note.
While five of BSE capital goods stocks hit their 52-week high during the day, stocks such as Larsen & Toubro and Crompton Greaves inched closer to their one year high at Wednesday’s close.
The BSE capital goods index rose 118.84 points, or 1.13 per cent, to close at 10,592, which was just short its 52-week high of 10,601.79, its hit in December last year. The index, meanwhile, was still quoting 49 per cent lower than its all-time highs of November 2007.
The capital goods index has risen 12.67 per cent in the past one year and is up around 54 per cent from its August 2013 lows.
The index has registered best returns after BSE IT (up 41.32 per cent), BSE healthcare (34.09 per cent), BSE auto (16.41 per cent) and BSE FMCG index (15.26 per cent) in the past one year.
The election commission on Wednesday announced a nine-phase election
starting April 7.
ABB India surged 8.82 per cent to Rs 795. The stock hit its 52-week of Rs 803.20 during the day. Fag Bearings, SKF India, Thermax and Va Tech Bag also hit their 52-week high during the day.
Va Tech Wabag, Alstom India, IL&FS Transportation and Bharat Electronics jumped 6.78 per cent, 6.65 per cent, 5.38 per cent and 4.85 per cent, respectively.
Thermax, Fag Bearings and Siemens also gained between 3.38 per cent and 4.71 per cent. SKF India ended 0.29 per cent lower at Rs 736.20.
“Capital goods stocks have been beaten-down in the past, but are attracting buyers these days largely on hopes that the investment cycle will pick up and order flows would start flowing in as the new government comes into power,” said Rikesh Parikh, AVP at Motilal Oswal Financial Services.
The government has recently cut excise duty for the capital goods sector to 10 per cent from 12 earlier, which has also supported these stocks.
“In the run-up to the general election, the IT and pharmaceutical stocks, and some of the select bottom-up stocks would continue to outperform, though there is growing interest in the cyclical sectors. The ideal strategy would be to increase one’s exposure to quality
names in the capital goods and engineering companies (eg Larsen and Toubro, Crompton Greaves, Bajaj Electricals and CESC and the private sector banks during corrections,” said Sharekhan in a note.
