Capital Goods Stocks Outlook: 30.07.2012 - 03.08.2012
Stocks of capital goods and engineering companies are
likely move in a narrow range ahead of Reserve Bank of India's
first-quarter monetary policy review on Tuesday. Treasurers, fund managers,
and economists, a majority expects the RBI governor to keep the repo rate
unchanged at 8.0%. High interest costs have been hurting Indian capital
goods and engineering companies for a while now. RBI has hiked the repo
rate, at which it lends to banks under its liquidity adjustment facility,
by a cumulative 175 basis points since January 2011. High interest rates,
coupled with industrial slowdown, and paucity of orders have strained the
operating margins of these capital-intensive engineering and construction
companies. Stocks of Suzlon Energy are likely to be in focus Monday as the
company yesterday redeemed outstanding foreign currency convertible bonds
worth $360 mln.
IRB Infrastructure stocks are also likely to see an uptick
as the company posted higher-than-estimated net profit and net sales for
Apr-Jun. The company is likely to face headwinds in the coming quarters due
to the various structural issues faced by the company such as lack of
clarity on fuel linkages, over-capacity in the boiler, turbine, and
generator space, and hurdles in obtaining environmental clearances and land
acquisition.
By RUPEE DESK [email protected]
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