Stocks of most capital goods and engineering companies are seen trading down next week, as market sentiment continues to be weighed down by tight liquidity in the sector and slow order booking. There is no immediate sign of revival in capital expenditure by private companies and the demand is still weak. However, investors are positive on Thermax and Larsen & Toubro as the companies are seen having better revival prospects in terms of orders due to their exports. Larsen & Toubro, which got orders worth 880 bln rupees in 2012-13, offers a strong investment opportunity owing to its strong fundamentals and attractive valuation. Thermax has a steady order intake, which bears well for the company in comparison with its peers, who have high exposure to domestic market.
Investors also see some sporadic buying due to the 2.66-bln-rupee stock buyback approved by Crompton Greaves, but see no significant impact on the sector's stocks. The company's buyback has been approved at 125 rupees a share, higher than its closing price of 87.15 rupees on the National Stock Exchange yesterday. Stocks of other capital goods companies like Cummins India are seen trading with a negative bias, as investors remain bearish on the sector on elusive orders. Siemens, which imports around 40% of its raw materials, is also seen trading down as the volatile rupee movement is likely to have a negative impact on the company's margins.