Capital goods shares surge post robust HSBC PMI data

Capital Goods shares are trading higher between 0.1-3.5% on the Bombay Stock Exchange (BSE) after Indian manufacturing activity expanded at its fastest pace in two years in December as new orders flooded in and factories kept price increases to a minimum, a business survey showed on Friday.

BHEL, L&T, Thermax, Crompton Greaves, Siemens, ABB and BEML have gained between 1-3%. Further, BSE Capital Goods index is trading at 15,658 levels up by 157 points or 1.01%.

Strong new business reinforces Finance Minister Arun Jaitley's view that the economy will grow "much better" in 2015-16, while weaker inflation gives the Reserve Bank of India (RBI) more room to cut interest rates as expected this year.

The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose to 54.5 in December from 53.3, its highest since end-2012 and its 14th straight month above the 50-mark that separates growth from contraction.

The survey also showed input prices slumped to a near six-year low as oil prices tumbled.