Whether it is an individual or a company, interest rates matter to every segment of the economy, the only difference is how strong is this co-relationship. For an individual, his or her EMI, right from home loans to personal loan to auto loan is decided by interest rates. For companies the cost of capital is decided by interest rates and capital is the lifeline for all companies. When it comes to companies, there are certain sectors which get impacted by movement in interest rates more than others. The reason is that both the demand for their product and service and their own ability to grow and have better margins has strong co-relationship with interest rates. Now with higher probability of interest rate coming down, will companies from contracting and construction space which work on wafer thin margins have better margins? If Yes, then order books which in any case are brimming may deliver more than expected.
In today s trade, the stock hit a new 52-week high of ₹219.70 apiece following India Ratings and Research (Ind-Ra) upgrading the company outlook to ‘positive’ from ‘stable’ while maintaining the long-term issuer rating at IND A plus.
Continuation of policies was the buzzword on the street on Monday. The reason was very simple, with strong wins in states, hope on the street is that election 2024 should see the continuation of the same government. which essentially means the sectors which have been in focus for the last nine years will continue to see positive policy push and stability. On top of the list is the infrastructure sector. Beside the steel and cement which are the biggest beneficiary of the infrastructure boom, it is construction and contracting companies which gain the maximum as infrastructure continues to get the push. ET screener powered by Refinitiv’s Stock Report Plus lists down infrastructure stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or "strong buy".
Over the past year, awarding of road projects has been below the target. In FY23, the National Highways Authority of India (NHAI) awarded 6,003 km of road projects compared with a target of 6,500 km. In the first half of FY24, MoRTH awarded road projects of close to 2,595 km during the period compared with a target of 12,500 km for FY24.
Small-cap stocks haven’t recovered the same way mega-caps have this year, but there are still plentiful success stories in the most volatile area of the market.