New Delhi, Feb 3 (PTI) – Capital goods stocks, including those from infrastructure and railways, witnessed a sharp decline on Monday following the Union Budget announcement, as the modest increase in capital expenditure (capex) for FY26 fell short of market expectations.
Leading industry stocks faced a significant downturn, with Siemens plunging 9.03%, Thermax dropping 7.50%, Hindustan Aeronautics Ltd (HAL) slipping 6.54%, and Bharat Dynamics losing 6.44%. Other notable losers included Rail Vikas Nigam (6.04%), Inox Wind (5.90%), ABB India (5.46%), and NBCC (4.83%).
Shares of Titagarh Rail Systems declined 4.65%, Larsen & Toubro (4.64%), CG Power (4.33%), Cummins India (3.67%), and Timken India (3.57%), contributing to a sharp fall in the BSE Capital Goods Index, which slumped 4.29% to 59,898.65.
The overall market sentiment also took a hit, with the BSE Sensex declining 319.22 points (0.41%) to settle at 77,186.74, breaking a five-day winning streak. Meanwhile, the NSE Nifty fell 121.10 points (0.52%) to 23,361.05.
The shortfall has been attributed to the 2024 general elections, which led to reduced government activity for nearly one quarter.
“The government seems to be relying on the private sector for some of the heavy lifting through Public-Private Partnerships (PPP), which has led to disappointment among capital goods, engineering, and infrastructure companies,” noted Gaurav Dua, SVP & Head of Capital Markets Strategy at Mirae Asset Sharekhan.
Vinod Nair, Head of Research at Geojit Financial Services, echoed similar sentiments, stating that the modest 10% year-on-year capex increase has impacted key sectors like railways, defence, and infrastructure, dampening overall market sentiment.
As the market recalibrates its expectations following the Budget announcement, industry experts anticipate a greater reliance on private sector investments to drive infrastructure growth. However, the immediate reaction suggests that investors remain cautious amid the capex shortfall and shifting fiscal priorities.
Leading industry stocks faced a significant downturn, with Siemens plunging 9.03%, Thermax dropping 7.50%, Hindustan Aeronautics Ltd (HAL) slipping 6.54%, and Bharat Dynamics losing 6.44%. Other notable losers included Rail Vikas Nigam (6.04%), Inox Wind (5.90%), ABB India (5.46%), and NBCC (4.83%).
Shares of Titagarh Rail Systems declined 4.65%, Larsen & Toubro (4.64%), CG Power (4.33%), Cummins India (3.67%), and Timken India (3.57%), contributing to a sharp fall in the BSE Capital Goods Index, which slumped 4.29% to 59,898.65.
The overall market sentiment also took a hit, with the BSE Sensex declining 319.22 points (0.41%) to settle at 77,186.74, breaking a five-day winning streak. Meanwhile, the NSE Nifty fell 121.10 points (0.52%) to 23,361.05.
Missed Capex Target Adds to Market Woes
Finance Minister Nirmala Sitharaman, while presenting the Union Budget for FY26, announced a capital expenditure outlay of ₹11.21 lakh crore. However, concerns grew as the capex target for FY25 is set to be missed by ₹93,000 crore, with revised estimates pegging it at ₹10.18 lakh crore, against the original estimate of ₹11.11 lakh crore.The shortfall has been attributed to the 2024 general elections, which led to reduced government activity for nearly one quarter.
“The government seems to be relying on the private sector for some of the heavy lifting through Public-Private Partnerships (PPP), which has led to disappointment among capital goods, engineering, and infrastructure companies,” noted Gaurav Dua, SVP & Head of Capital Markets Strategy at Mirae Asset Sharekhan.
Vinod Nair, Head of Research at Geojit Financial Services, echoed similar sentiments, stating that the modest 10% year-on-year capex increase has impacted key sectors like railways, defence, and infrastructure, dampening overall market sentiment.
As the market recalibrates its expectations following the Budget announcement, industry experts anticipate a greater reliance on private sector investments to drive infrastructure growth. However, the immediate reaction suggests that investors remain cautious amid the capex shortfall and shifting fiscal priorities.
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