FIIs have invested 40000 Crores in this Sector over the last 1 Year
FIIs raised stakes in the following Stocks over the last 1 year:
1. L&T: Shareholding ⬆️ from 22% to 26%
2. Polycab: Shareholding ⬆️ from 6.5% to 9.6%
3. Siemens: Shareholding ⬆️ from 6% to 7.5%
What is common between these Stocks?
Why are FIIs interested?
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The Stocks above are from the Capital Goods Sector.
1. FIIs invested ₹40000 Crores in Capital Goods over the last 1 year.
2. FIIs overall net Equity investments stood at ₹1.76 lac Crores in the same period.
3. Around 23% of FII investments has gone into Capital Goods alone.
What are Capital Goods?
1. Provide equipment for other industries to function.
2. Lay the Foundation for Manufacturing activity.
3. E.g., To execute a metro rail project -> forklifts, cranes, construction vehicles are needed.
What are the Sub-Sectors in Capital Goods?
Construction Vehicles
Heavy Electrical Equipment
Railway Wagons
Defense
Shipbuilding
Cables
Castings/Forgings
Packaging
Glass
Iron and Steel Products
Bearings
Why are FIIs interested?
Government policies in favor of manufacturing/infrastructure.
Future power capacity addition.
The imports of capital goods to India is 3X the exports. Opportunity to close this gap. - Ageing Equipment across Industries needing replacement.
Top Stocks in the Capital Goods Sector?
How about price performance over last 1 year?
Capital Goods Sector has significantly outperformed the BSE 500 Index by a wide margin (not an indication for future outperformance).
Capital Goods Sector is cyclical in nature. That is if economy is doing well, it does well and vice versa. One needs to be careful before investing in cyclical sectors. But nonetheless, FIIs seem to be quite bullish on the India Manufacturing Story.
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