88% of stocks from this BSE index have outperformed Sensex in 2023. Here’s what analysts have to say

The capital goods sector has managed to keep its head high compared to others till June 23 this calendar year. Market watchers believe the government’s infrastructure push ahead of the 2024 general elections has supported sentiments. With a rally of 18.4 per cent year-to-date (YTD), the BSE Capital Goods index emerged as the top gainer. On the other hand, the benchmark BSE Sensex gained just 3.5 per cent during the same period. 

Data further highlighted that as much as 88 per cent of stocks in the Capital Goods index have outpaced the 30-share index Sensex so far in 2023. Shares of ABB India advanced the most 58 per cent to Rs 4,238.40 on June 23, 2023 from Rs 2683.15 on December 30 last year. Hindustan Aeronautics (up 44 per cent), Carborundum Universal (up 37 per cent), CG Power and Industrial Solutions (up 36 per cent), Polycab India (up 33 per cent) and Suzlon Energy (up 31 per cent) stood among other major gainers in the index. 

Sharing his views, Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities, said, “The government’s increased push towards infrastructure led to a surge in the order books of companies. Further, post Covid, private sector companies have reaped the rewards of deleveraged balance sheets. With this being a pre-election year, order books for infrastructure companies are bound to swell further. This would ultimately get reflected in their financials. However, timely execution of projects remains a key challenge.” 

Siemens, AIA Engineering, Elgi Equipments, Grindwell Norton, Sona BLW Precision Forgings, Bharat Electronics, Schaeffler India, Larsen & Toubro and Thermax also soared between 10 per cent and 30 per cent YTD. 

Amar Ambani, Head-Institutional Equities, YES Securities, added that the data for gross fixed capital formation suggests private capex is in the offing. “Data on imports of key machinery also hint at some action in the industrial space. Although private capex is currently dominated by renewables and other select sectors like cement, it will broad base itself as capacity utilisation rises beyond 80 per cent. Besides, process automation is a mega opportunity,” Ambani said. 

Gaurav Dua, SVP, Head of Capital Market Strategy at Sharekhan by BNP Paribas, said, “Engineering and capital goods outperform in an economic uptrend. We are positive on Larsen & Toubro in capital goods space.” 

Among the other major outperformance, shares of Thermax, Lakshmi Machine Works, SKF India, Bharat Heavy Electricals, GMR Airports Infrastructure, Timken India and Praj Industries also gained between 5 per cent and 10 per cent on a year-to-date basis. 

Also read: RattanIndia Power shares zoom 19% to trade near one-year high levels; here's why

Also read: Shree Cement shares: LIC, FPIs, MFs take Rs 2,500 crore notional hit as stock tanks