Amid Covid, capital goods sector sees signs of hope

Indications of demand expansion for manufacturing companies, stronger balance sheets are some positives

In the past 12 months, the stock market has done very well despite economic contraction. The second half of 2020-21 was good with strong earnings gains across many sectors and de-leveraging in many companies as a result. So, balance sheets are in better shape.

Is it time for corporates to start investing in capacity expansion again? If corporates regain some confidence in demand revival, we would see signs of that in the capital goods sector. Indeed, Q4 results were encouraging. Against that, Q1 of FY22 was a slow quarter with the second Covid wave impacting demand, and this could somewhat