Helping You Build Wealth With Honest Research
Since 1996. Read On...

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Revealed
India's Third Giant Leap

This Could be One of the Biggest Opportunities for Investors




Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

What's worrying capital goods stocks?
Mon, 6 Sep Pre-Open

After a dull previous week, the Indian markets closed last week amidst gains. However, the Sensex remained as the worst performer among key global indices. A large part of the slackness in India was due to pressure on stocks from the oil & gas and capital goods sectors. These stocks have in fact been under some pressure off late. This is given that their respective indices - BSE-Oil & Gas and BSE-Capital Goods - have underperformed the broader Sensex in recent times.

Asian stocks too saw some action this week as Singapore, China and Japan reported weekly gains in the range of 1% to 2%. India's benchmark index, the BSE-Sensex was however, the top underperformer this week, with gains of only 1.2%.

Source: BSE

Let's talk about capital goods sector here. Stocks from this sector were among the worst sufferers in the financial and economic crisis of 2008. And then these were among the front-runners in the bull-run that started in March last year. One of the biggest reasons for their downfall and then the recovery was the availability of finance for industrial companies. A shortage of money for industrial capex in 2008 negatively impacted the capital goods stocks. And then the flush of cheap global liquidity that started in March 2009, and that brought the much needed cash for industrial expansion, capital goods companies rode the wave.

As we stand now, while the industrial growth remains positive, it is showing signs of a slowdown. As per the June figures release in August, growth in India's industrial production slipped to a 13-month low as the effects of government stimulus waned and expansion returned to more normal levels. Industrial growth during that month slowed down to 7.1% YoY, after eight months of double-digit expansion. The impact of this slowdown has been seen on the stocks of capital goods companies off late.

Considering the global uncertainty and caution regarding the RBI's interest rate stance, the capital goods sector's fortunes remain under a cloud of uncertainty. As far as the broader markets are concerned, we see high valuations weighing heavy on stock prices.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "What's worrying capital goods stocks?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.