Assessing the production growth
In the previous article, we discussed the overall reforms, initiatives, and incentives that the government is trying to push in order get the infrastructure sector and the economy on track. In this part, we will assess the growth of sectors that support the infrastructure sector. The chart below compares the growth of the eight core infrastructure sectors between April and September 2014 to their growth in the corresponding period of 2015.
Production growth has been falling
In the first two quarters of fiscal 2016, the production growth of four out of the eight sectors has fallen as compared to the first two quarters of fiscal 2015. The Indian fiscal year is from April to March. Coal, steel, cement, and electricity are very important sectors that drive the overall infrastructure sector. Production growth in coal fell by 3.5%. Production growth in steel fell by a sharp 7% to near zero. Similarly, in cement and electricity, the production growth fell by 8.4% and 6.3%, respectively.
India-focused mutual funds
India-focused mutual funds have given dismal returns this year. The Wasatch Emerging India Fund (WAINX) is an India-focused fund. In the current year as of December 22, 2015, WAINX has given a return of about 1.7% on a YTD (year-to-date) basis. Another India-focused fund the Eaton Vance Greater India Fund – Class A (ETGIX) returned a negative 7% in the same period. ICICI Bank (IBN), Infosys (INFY), Wipro Technologies (WIT), and Tata Motors (TTM) form a part of the India-based funds’ portfolios.
In the next article, we will look at sales in the Indian infrastructure sector.