Modi’s policy, China pollution curbs make Indian industrial firms world’s best

Of the 15 best-performing stocks over five years, eight are from Asia’s No. 3 economy and range from graphite electrode makers to equipment providers.

Indian companies are dominating the ranks of the world’s best-performing industrial firms as they benefit from neighbouring China’s pollution crackdown and billions in domestic infrastructure spending.

A worker stands next to steel tubes in the finished goods scrap yard at a steel factory in Hisar, Haryana. (Udit Kulshrestha/Bloomberg)

Of the 15 best-performing stocks over five years, eight are from Asia’s No. 3 economy and range from graphite electrode makers to equipment providers. Companies such as HEG Ltd., Graphite India Ltd. and Finolex Cables Ltd. have benefited from China’s pollution control measures as well as India’s pledge to electrify even the remotest village, said Gopal Agrawal, portfolio manager at Tata Asset Management Ltd., which oversees $3 billion in equity funds.

Prime Minister Narendra Modi’s focus on electrification has buoyed demand for cables and wires used in the power sector. India added 100,000 circuit kilometers of interstate transmission capacity in the last four years, according to a June 5 statement from India’s power ministry. The nation has also pledged to spend $88 billion this fiscal year on roads, railways and other infrastructure.

“Graphite is a godsend opportunity from China,” said Agrawal, whose firm has the third-largest equity exposure to the industrials sector. “If China relaxes its environment pollution norms, that could negatively impact the party for India’s industrial firms.”