Capital Goods stock rally on fresh buying

Stocks

oi-Sunil

By Sunil Fernandes

Published: Thursday, November 28, 2013, 13:10 [IST]

Capital Goods stocks are back in the limelight with several of the stocks rallying in trade in the last few trading sessions.

In today's trade, Suzlon Energy has rallied 6.1 percent, while IL&FS Transportation Networks rose 5 percent and Bharat Heavy Electricals gained almost four per cent.

Stocks like Crompton Greaves have been gaining ground and has jumped almost 4 per cent today. In fact, the stock has rallied from the Rs 92 levels to the current levels in just a few weeks.

Investors frenzy is largely on hopes that there would be some recovery in the capital goods sector once the investment cycle turns.

However, analysts are of the opinion that is likely to take sometime and is most probably likely to happen following the General Elections later next year.

A new government is likely to push infrastructure and other major developmental projects, triggering a fresh demand for capital goods.

It's been quiet a few quarters since capital good stocks have been languishing, given the high interest rates and working capital required.

While the optimism of the rally in the stocks is understandable, analysts believe that the current rally may largely be a trading driven rally, rather then on the basis of an improvement in fundamentals.

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