How weak govt capex hurts recovery hopes of capital goods firms
Deterioration in capex will slowly seep into weak order flows for capital goods firms
One may argue that while the government lowered fiscal deficit estimates for the year to 3.3% from the interim budget’s 3.4%, it may rely on off-balance sheet financing for central expenditure
The lack of a fiscal stimulus to boost near-term growth in the union budget has dimmed hopes of a sustained recovery in the capital goods sector. As it is, the pace of project execution and order flows for these firms had slowed down in the run-up to the general elections. But, this was expected to be a blip, with an improvement expected from the second half of FY20.
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