The capital goods sector can be sub-divided into the electrical and non-electrical segments. The non-electrical machinery segment is truly dependent on the prospects ofindustrial investment. Electrical machinery, however, is linked to the availability of power. Therefore, its prospects are linked more to the power sector.

Within the non-electrical segment, machine tools, textile machinery, compressors and drilling equipment, diesel engines, and general industrial machinery constitute the major categories. All these categories experienced varying degrees of positive growth in the last four months.

In machine tools, the cutting tools segment holds more opportunities than general purpose machines. Though cutting tools cater to the needs of all industries, a significant portion of the demand comes from the automobile industry. Consequently, the uptrend in the auto sector had a positive impact on the fortunes of the cutting tools segment. Since this segment constitutes a consumables one, it would be the first one to recover as also the first to fall in the event of a slowdown in industrial production.

As far as compressors are concerned, they have a wide user-industry profile, but most orders come from petrochemicals, natural gas and oil exploration, fertilisers, infrastructure and construction. The demand for compressors is solely dependent on capacity expansion and new projects by user industries. The current uptrend in the capital goods sector can be attributed to increased capacity utilisation levels. Against this background, the medium term prospects for compressors are not bright.

As far as mining equipment is concerned, growth is restricted by the fact that the mining industry itself continues to post negative growth rates despite the pick up in industrial recovery. This does not augur well for the mining equipment segment.