Low valuations, stagnant organic growth and pressure from shareholders to put large cash piles to work will lead to an uptick in mergers and acquisitions activity in the industrials sector, according to analysts at Fitch - but buyers should beware the risk of being downgraded if they commit to the wrong deal.

In a report on the capital goods sector published today, Fitch Ratings said it expected M&A activity to "increase significantly" during the remainder of 2010 and through 2011 after a 24-month period of stagnation.