Underperformance of capital goods would continue: Mitesh Thacker

Mitesh Thacker, Technical Analyst, miteshthacker.com, talks to ET Now on the market outlook.

What did you make of the weakness that the capital goods space saw in yesterday's trade, in particular L&T?

Both the stocks L&T and BHEL have not done very good. In fact BHEL now trades below the low which the stock price had recorded when the markets were at 4750.

Clearly underperforming, not only that, the structure also remains weak now. BHEL I have some kind of a sell recommendation on the stock price with a first target of about 1610 but there was a chance of some kind of accumulation or base building happening at 1680-1700 levels which the stock has broken.

So this is not very positive sign in a market which has been slightly above from the lower levels which the indices were couple of weeks back. I would suspect the underperformance would remain here for sometime to come.

Larsen also gave a very good rally but it is now re-approaching those supports from where it bounced back. 1550-1530 if they are being broken, the chart pattern would be very similar to what we are seeing in BHEL.

The underperformance would continue. Probably a further decline to 1450-1420 that is the broad range I would look for as the first target where the stock has settled down but in the short term as well as in the medium term, these are the weaker stocks, the underperforming stocks.