Demonetisation After Effect: Capital Goods Sector

The demonetisation move by the Modi government to curb the black money menace was welcomed by many, but it has sucked liquidity from the markets drastically. The adverse effects of demonetisation has left the economy gasping, albeit for the short term. While the markets are struggling to get back on track soon, the capital goods sector stocks have taken a beating on the bourses. 

Take, for instance, the capital goods index which has fallen by over 2 per cent since November 9. Major shares such as Larsen and Toubro fell 1 per cent, BHEL declined 4 per cent while Mahindra CIE Automotive fell by over 5 per cent. Solar Industries has fallen by 2 per cent. Crompton Greaves on the other hand has fallen by over 12 per cent. Shares of Thermax has declined by 2 per cent.

This is not the first time that capital goods stocks have taken a plunge. In April 2016, capital goods stocks had plunged more than 60 per cent this year from their 52-week highs. However, experts believe that this is the right time to get into these stocks.