BSE Capital Goods index up over 2%; L&T at 18-month high

In past one-week, the capital goods index up 4.8% against 1.9% rise in Sensex.

Shares of construction & engineering companies were in focus with the BSE Capital Goods index surging more than 2%, up for the fifth straight trading day.

At 11:55 am, the S&P BSE Capital Goods index, the largest gainer among sectoral indices, was up 2.3% or 379 points at 16,825 as compared to 0.55% rise in the S&P BSE Sensex. The index hit a fresh 52-week high of 16,858 on BSE in intra-day trade.

In past one-week, the capital goods index outperformed the market by surging 4.8% against 1.9% rise in the benchmark index.

Larsen & Toubro (L&T), Mahindra CIE Automotive, ABB, Bharat Heavy Electricals Limited (BHEL), Bharat Electronics (BEL) and Lakshmi Machine Works were up more than 2% each.

Analysts see capital goods related stocks doing well over the medium-term, as underlying economic growth gradually picks up in pockets and spreads to other areas.

“While synchronous recovery is still some time away, select capital goods businesses leveraged to early recovery will do well. On the consumption side, businesses more leveraged to rural economy might do well as buying power recovers both due to more government focus on rural areas and better productivity. Consumer durables might prove to be a multi-year story,” said Harshad Patwardhan, CIO – Equities at Edelweiss Asset Management. CLICK HERE TO READ FULL REPORT.
 

Among the individual stocks, L&T has rallied nearly 4% to Rs 1,638, its highest level since August 28, 2015 on BSE. The company bagged new orders worth of Rs 14,223 crore during the last week.

“L&T has historically seen strong order inflows in Q4 due to pressure on various entities to achieve annual targets. The company is L1 in a healthy basket of orders, and the pipeline is strong at Rs 60,000 crore, besides slippage of large orders to FY18,” analysts at IIFL Institutional Equities said in recent report. The brokerage firm maintains ‘buy’ rating on the stock with 12-month target price of Rs 1,706.

COMPANY	LATEST	PREV CLOSE	GAIN(%)
MAHINDRA CIE	227.95	212.20	7.42
LARSEN & TOUBRO	1631.00	1577.60	3.38
A B B	1309.00	1279.65	2.29
LAK. MACH. WORKS	4315.00	4219.20	2.27
B H E L	166.75	163.10	2.24
BHARAT ELECTRON	159.75	156.35	2.17
RELIANCE DEFENCE	68.20	67.25	1.41
KALPATARU POWER	326.60	322.10	1.40
GE T&D INDIA	335.00	330.55	1.35
SIEMENS	1272.65	1257.80	1.18