MUMBAI/BANGALORE (Reuters) - India's construction and engineering companies are set to produce the best returns for investors for a third year running as India pours more cash into building roads, airports and power plants, but their popularity has left some stocks with lofty valuations.
The stockmarket stars of three to eight years back -- technology and software companies like Infosys -- will stay out in the cold as they are heavily exposed to a potential recession in the United States.
Analysts and fund managers said a recent stock market slide, which has left the benchmark BSE 30-share index down around 10 percent this month alone, has helped skim some of the froth from infrastructure stocks. They say India's builders, power equipment makers and engineers are relatively protected from any U.S. downturn.
This is because the Indian economy is driven mainly by domestic demand, and rising incomes are boosting demand for everything from consumer goods to cars and houses, and companies are building new factories and expanding.
"If 1995-2005 belonged to information technology, then 2005-2015 belongs to infrastructure," said Ved Prakash Chaturvedi, managing director of Tata Mutual Fund, which runs two infrastructure funds worth $1.3 billion.
Infrastructure funds were the best performers for two years in a row, with four of the top 10 funds notching gains of 90 percent in 2007 following a more than 55 percent jump by six of the top 10 in 2006, data from fund tracking firm Lipper showed, outperforming the main BSE index's 47 percent rise.
The stockmarket stars of three to eight years back -- technology and software companies like Infosys -- will stay out in the cold as they are heavily exposed to a potential recession in the United States.
Analysts and fund managers said a recent stock market slide, which has left the benchmark BSE 30-share index down around 10 percent this month alone, has helped skim some of the froth from infrastructure stocks. They say India's builders, power equipment makers and engineers are relatively protected from any U.S. downturn.
This is because the Indian economy is driven mainly by domestic demand, and rising incomes are boosting demand for everything from consumer goods to cars and houses, and companies are building new factories and expanding.
"If 1995-2005 belonged to information technology, then 2005-2015 belongs to infrastructure," said Ved Prakash Chaturvedi, managing director of Tata Mutual Fund, which runs two infrastructure funds worth $1.3 billion.
Infrastructure funds were the best performers for two years in a row, with four of the top 10 funds notching gains of 90 percent in 2007 following a more than 55 percent jump by six of the top 10 in 2006, data from fund tracking firm Lipper showed, outperforming the main BSE index's 47 percent rise.
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