Playing capital goods theme: A stock-specific approach is the right tactic

The S&P BSE Capital Goods Index hit a 52-week high of 18,252 on Monday

The capital goods or industrial sector has bounced back into the limelight on hopes of a swift economic recovery and reasonable stock valuations.

The S&P BSE Capital Goods Index hit a fresh 52-week high of 18,530.46 on Wednesday after rallying more than 30 per cent since November. As a result, the index now trades at 12-month forward price-to-earnings (P/E) multiple of 31 times – the highest since March 2018.

And there is reason to cheer. The October IIP data released last Friday post market hours showed factory output expanded the most since February. The healthy recovery in manufacturing was reflected