Speaking to Fund Selector Asia, Marwaha said infrastructure expansion is at the forefront of Prime Minister Narendra Modi’s agenda. He noted that investors could consider companies involved in road construction, such as bitumen and cement providers.
The National Development Planning Commission and the Roads and Port Authority of India will likely increase their debt levels over the short-term.
Data from the National Highways Authority of India show that the agency aims to support projects that involve building 20,000 kilometers of roads over the next two years.
In a bid to fast-track highway projects, Modi has empowered the Road Transport and Highways Ministry to approve projects with construction costs up to $250m (€236.3m, £166.3m).
“Road projects that were stalled will be pushed through. The government will utilise the public-private-partnership (PPP) scheme to push these projects through,” Marwaha said.
A snapshot of the top five performing Indian equity funds:
Three of the funds allocate more than 5% of their holdings to the materials sector. Materials make up 15.9% of the top-performing JP Morgan India Smaller Companies Fund.
PineBridge noted in a disclosure this month that Shree Cement helped its India equity fund’s performance.
“The team continues to remain overweight in domestic cyclicals, especially in the industrial and materials sector,” PineBridge said.
Invesco noted that the present corporate profits of Indian companies are depressed relative to their long-term averages. If and when the economy moves into higher gear, there will be scope for profits to recover to historical averages.
“This mean reversion in profits will be led by the cyclical sectors, such as the industrials, financials, consumer discretionary and materials sectors. In the materials sector, the recovery will be linked to global economic trends,” Invesco noted.
