Capital goods to stay subdued, with government policy action uncertain: Manish Sonthalia

In a chat with ET Now, Manish Sonthalia, Sr VP & Head-Equity Portfolio Management Services, MOSL AMC-PMS shares his views on capital goods space. Excerpts:

ET Now: Of late, capital goods as well, have been showing some trading moves and if the assumption is that in 2014 we are going to see economic growth kicking back in, definitely capital goods, as well will do well?

Manish Sonthalia: That is more of a hope trade, as of now. There are a lot of project announcements, but money is not moving on the ground. If you have a regime change at the centre, obviously this entire hope will translate into execution and action, but the markets are not very confident on that just yet.

So yes, stocks have run up, but there is nothing to suggest that things are changing at the ground level in a very significant way. Therefore, post the elections at the very least, the cap good space should remain somewhat subdued, because if you look at the IIP numbers, the cap good space is still de-growing on a low base.

Hence, there will be time to get into the capital good space when you see some meaningful traction, as far as the numbers and the earnings are concerned.