IIFL Institutional Equities has identified selective investment opportunities in the capital goods and power equipment sectors, despite ongoing copper price pressures affecting industrial value chains. Renu Baid Pugalia, Senior Vice President of Research at IIFL Institutional Equities, highlighted CG Power and Industrial Solutions and Netweb Technologies India as key beneficiaries of recent market corrections.

CG Power Positioned for Growth Despite Market Headwinds

CG Power emerges as a compelling investment opportunity following recent valuation corrections, according to Baid's analysis. The company's position as a cost leader in power equipment, particularly on the transformer side, provides structural advantages in the current market environment.

The ₹900 crore order from a US data centre represents a particularly significant milestone, reinforcing CG Power's export focus and successful entry into the challenging private-sector US market. This order, combined with the company's capacity expansion plans, demonstrates strong execution capabilities backed by a robust order book.

Copper Price Impact Varies Across Sectors

The recent surge in copper prices is creating differentiated impacts across India's industrial and power equipment sectors. Companies serving government contracts are demonstrating better resilience compared to those exposed to short-cycle industrial businesses, according to Baid's assessment.

Transformer and grid equipment manufacturers supplying government utilities, such as CG Power, benefit from price variation clauses in their contracts, providing insulation against commodity cost inflation. However, short-cycle industrial segments face continued margin pressure due to soft demand environments that make immediate price pass-through challenging.

Electrical Goods Sector Shows Mixed Performance

The fast-moving electrical goods sector demonstrates varying abilities to manage copper price inflation. The wires and cables market has matured sufficiently to pass on cost increases on a weekly or fortnightly basis, with this trend visible in results from Polycab India and Havells India.

Conversely, other consumer product segments including fans and air conditioners face margin pressure due to weak consumer demand, high competition, and elevated inventories. Baid expects this pressure to persist for one to two quarters until demand conditions improve, enabling effective price pass-through.

Netweb Technologies Positioned for AI Infrastructure Growth

Netweb Technologies represents a strategic opportunity in the technology space, with strong positioning to benefit from India's National AI Mission. The company's prospects are supported by substantial infrastructure opportunities and robust execution capabilities.

Baid projects Netweb could capture 50-60% wallet share of the ₹10,000 crore sovereign AI infrastructure opportunity over the next three years. With revenue growth potential of 40-50% and earnings per share forecast to more than double from ₹40.00 in FY26 to ₹90.00 in FY28, the company demonstrates significant growth trajectory.

Grid Equipment Sector Faces Valuation Reset

The broader grid equipment space, including companies like Hitachi Energy India, has experienced justified valuation corrections according to IIFL's analysis. These companies had been reporting cyclically high margins with sharp valuation run-ups, creating conditions for market adjustment.

Increased competition prospects, including potential entry from Chinese original equipment manufacturers, and new capacity additions are expected to moderate pricing over the next 12 months. This environment creates opportunities for selective investment in fundamentally strong companies at more attractive valuations.

Kotak Institutional Equities has raised concerns about the outlook for retail-heavy stocks, warning that many could face further declines despite recent corrections. The brokerage's comprehensive analysis reveals that retail investors have experienced significant underperformance over the past 16-18 months, with most portfolios delivering weak or barely positive returns even as headline market indices remained steady.

Top Retail-Heavy Stocks Show Negative Returns

The study examined the top 20 retail-heavy stocks in the Nifty-500, revealing a concerning pattern of negative returns since June 2024. These stocks had experienced a strong run-up between March 2023 and June 2024 before the subsequent decline.

While most stocks in this category underperformed, HBL Engineering and Anand Rathi Wealth stood out as notable exceptions, delivering gains of 69.00% and 54.00% respectively during the same period.

Valuation Concerns Persist

Kotak Institutional Equities emphasized that valuations in many narrative-driven stocks remain disconnected from underlying fundamentals, even after recent corrections triggered by failed growth or turnaround stories. The brokerage warned that these stocks are likely to lose a significant portion of their market cap over time, potentially prolonging the period of weak returns for retail investors.

Mutual Fund and PMS Performance Lags

The underperformance extends beyond direct equity holdings to investments routed through mutual funds and portfolio management services. Equity-oriented mutual fund investors earned very modest returns between July 2024 and December 2025, despite this period accounting for nearly 53.00% of total equity MF flows mobilized between CY22 and CY25.

The analysis showed that a retail investor would have needed to invest consistently since September 2022 to achieve an XIRR of more than 13.00%, even before accounting for expenses and taxes.

Retail Participation Trends

Retail AUM in NSE-listed stocks has remained broadly stable at approximately ₹43.00 lakh crore over the last 18 months. While retail equity AUM expanded at a CAGR of around 15.00% between 2021 and 2025, most of this growth was concentrated between March 2023 and June 2024. Since then, retail participation in equities has cooled, reflecting increased caution amid uneven stock performance.

Market Outlook and Risks

Kotak Institutional Equities cautioned that prolonged underperformance could threaten future inflows, especially as investors place greater emphasis on risk-adjusted returns. The brokerage highlighted a growing mismatch between investor expectations and realized outcomes, particularly in midcap, smallcap, and thematic funds that attracted the bulk of inflows over the past two years. The findings underscore the challenges retail investors face in timing, stock selection, and exposure to high-risk market segments.