*RUPEE DESK: Capital Goods Stocks Outlook for the week (11 - 15.06.2012)***
Stocks of capital goods and engineering companies are likely to move in a narrow range next week before data on India's industrial production in April is released Tuesday. The performance of the country's industrial sector in the month will determine the trend in the market next week. In March, India's Index of Industrial Production contracted 3.5% mainly due to a sharp contraction of 21.3% in production of the capital goods sector. Stocks of sector majors such as Larsen & Toubro, Siemens, and Bharat Heavy Electricals are seen rising in the near term. There was some buying in stocks of these companies last week on market talk the Reserve Bank of India may cut the repo rate, at which it lends to banks under its Liquidity Adjustment Facility. It's better to be a sceptic at this point of time. The scenario in the capital goods and engineering sector would remain grim unless the government starts policy reforms. In a meeting convened by Prime Minister Manmohan Singh, the government set ambitious infrastructure sector targets for this financial year. We do not see the government meeting these targets. In 2012-13 (Apr-Mar), the government aims to add 17,957 MW power in 2012-13-- including 2,000 MW from Kudankulam Atomic Power Project--award 9,500-km road construction projects, and set up three greenfield projects and two ports, among others. The Capital goods index has underperformed the broader index by 6% over the last three months. A meaningful recovery in investment cycle has to be triggered by policy action. Till then search for bottom (in capital goods stocks) continues By RUPEE DESK [email protected] www.rupeedesk.in -- You received this message because you are subscribed to the Google Groups "Kences1- Rupeedesk" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/kences1?hl=en.
