Capital goods index tanks 5% in 1 week; what's making the Street nervous?

In the past one week, the stock price of BHEL, Hitachi Energy India, Siemens Energy India and Cummins India have declined between 7 per cent and 12 per cent.

Shares of capital goods companies today

 

Shares of capital goods companies were under pressure with the BSE Capital Goods index down 2 per cent on the BSE in Monday’s intra-day deals. In the past one week, the index has tanked 5 per cent, as compared to 3 per cent decline in the BSE Sensex.

 

Hitachi Energy India (₹16,976.25) and Bharat Heavy Electricals Limited (BHEL) (₹258.30) were down 5 per cent each on the BSE in intra-day trade today. Kirloskar Oil Engines, Apar Industries, Thermax, Cummins India, Siemens, Siemens Energy India and ABB India were down in the range of 2 per cent to 4 per cent.

 

 

In the past one week, the stock price of BHEL, Hitachi Energy India, Siemens Energy India and Cummins India were down between 7 per cent and 12 per cent.

 

At 09:57 AM; BSE Capital Goods index was down 1.2 per cent, as compared to 0.51 per cent decline in the BSE Sensex.

 

Why are capital goods stocks under pressure?

 

Since Thursday, January 8, 2026, capital goods stocks declined sharply after a Reuters report suggested that the Government of India may ease restrictions on Chinese firms bidding for government contracts, imposed in 2020. 

 

The move is aimed at addressing project delays and supply constraints across power, railways, and infrastructure sectors. The curbs, which required Chinese bidders to obtain security clearance and committee registration, had effectively barred Chinese companies from participating in Indian government tenders worth an estimated $700–750 billion.

 

The fall in capital goods stocks reflects concerns over renewed competition from Chinese OEMs in government tenders.

 

Meanwhile, India is witnessing a rise in power demand, driven by economic development, urbanization, and rising consumption. The country has planned a cumulative power generation capacity of more than 990 GW by 2032. In order to evacuate and transmit power from generating centres to load centres, Government has planned to add 12.7 Lakh MVA of Transformation capacity and 32 GW of HVDC system by the year 2032 which will comprise of creation and expansion of High capacity AC transmission corridors and multiple High Voltage DC (HVDC) systems, BHEL said in its FY25 annual report.

 

BHEL has a strong footprint in India’s Transmission landscape with capabilities in both projects as well as products segments, and is well placed to capitalize on the emerging business opportunities.   CATCH STOCK MARKET LIVE UPDATES TODAY

Brokerages view on capital goods sector

 

The reported easing of curbs has created near-term negative sentiment for the capital goods companies, driven by fears of higher competitive intensity and pricing pressure in PSU-led tenders, particularly in power equipment, transmission, and railway projects. Companies with greater dependence on government orders face higher sensitivity to potential margin compression and lower bid competitiveness, according to ICICI Securities.

 

At the same time, the policy consideration appears driven by India’s growing thermal power capacity requirements, with restrictions on imports contributing to equipment availability constraints and project delays. India is targeting a thermal capacity of ~307 GW over the next decade, and timely addition of large supercritical units requires assured access to boilers, turbines, generators, and balance-of-plant equipment, the brokerage firm said in a note.

 

Meanwhile, analysts at Elara Capital expect its capital goods universe to post a revenue growth of 10 per cent year-on-year (YoY) in December 2025 quarter (Q3FY26E), given healthy industrial demand and robust execution. 

 

Major capital goods companies, excluding L&T, have announced cumulative orders worth ₹32,400 crore in Q3FY26, down 20 per cent YoY (excluding the HVDC order for Khavda South Olepad). This includes a large thermal order won by BHEL    =========================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.