Grid, defence and exchange stocks outpace Nifty 50 in three‑year rally
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A United One News screen of about 270 NSE-listed stocks finds power-equipment, defence and market-infrastructure shares beat the Nifty 50's 5.5% annual return since 2023 — but oil, rising rates and stretched valuations cloud the next two years.
Original report
Market data as of 25 September 2026. For information only; not investment advice.
Power-grid equipment makers, defence suppliers and market-infrastructure companies were India's best-performing stocks over the past three years, beating the Nifty 50 by a wide margin. A United One News screen of about 270 NSE-listed companies found the top large caps compounded at 41–122% a year since September 2023, while the benchmark index managed 5.5% a year and is down 7% over the last 12 months.
The winners share three traits: government-backed demand, little Chinese competition, and the ability to pass on rising costs. Those same traits may matter even more over the next two years, as oil prices, rising interest rates and high valuations test the market.
The three-year leaders
The screen ranked stocks by annualised share-price return from 25 September 2023 to 25 September 2026, keeping only companies listed before October 2023, covered by at least five analysts with a consensus rating of Buy or better, and no more than two per sector.
Large caps (benchmark Nifty 50: 5.5% a year)
- GE Vernova T&D India — 122% a year
- Hitachi Energy India — 95%
- Solar Industries — 62%
- Eternal (Zomato and Blinkit) — 50%
- Bharat Electronics (BEL) — 43%
- TVS Motor — 41%
Mid caps (benchmark Nifty Midcap 150: 14.2%)
- MCX — 107%
- Nippon Life India AMC — 56%
- Kalyan Jewellers — 42%
- Oil India — 41%
- Dixon Technologies — 40%
- Prestige Estates — 34%
Small caps (benchmark Nifty Smallcap 250: 14.6%)
- Pearl Global — 77%
- Sansera Engineering — 70%
- Astra Microwave — 58%
- Arvind — 51%
- Amber Enterprises — 33%
- Data Patterns — 29%
Why these sectors won
Grid spending. India plans roughly ₹9 trillion of transmission investment to 2032, and Citi estimates a ₹1.6 trillion high-voltage DC opportunity, according to Business Standard. Few manufacturers are certified to supply it, which protects pricing.
Defence indigenisation. Domestic defence output reached ₹1.78 lakh crore in FY26 against a target of ₹3 lakh crore by 2029, and exports rose about 63%, Manorama Yearbook reported. Solar Industries' order book stands at about 1.9 times annual revenue.
Household savings moving into markets. Gross inflows into equity mutual funds reached about ₹4 trillion in the first half of 2026, lifting fund managers such as Nippon Life AMC. MCX, which holds about 98% of India's commodity futures market, benefited from wartime swings in gold and crude.
Manufacturing shifting from China. India's electronics exports rose about 24% to roughly $48bn in FY26, helping contract manufacturers such as Dixon and Amber.
Tariffs have eased and trade deals are opening markets
The US tariff on most Indian goods has fallen from 50% in August 2025 to 10% today. An interim deal in February removed a penalty linked to Russian oil, and since 24 July a Section 301 "forced labour" tariff has set India's rate at 10%, below the 12.5% applied to China and Vietnam, according to law firm Honigman. Steel and aluminium still face 50% US duties, and a separate US investigation into industrial overcapacity names electronics among its targets.
Meanwhile, India's trade deal with the UK took effect on 15 July, removing duties of up to 12% on Indian apparel (Fibre2Fashion), and the EU agreement is expected to be signed in December and take effect in early 2027 (SteelOrbis). Textile exporters such as Pearl Global and Arvind stand to gain most, although exporters have historically claimed trade-deal benefits on only a fraction of eligible goods.
India versus China
India is growing about 2.5 to 3 percentage points a year faster than China. The economy expanded 7.8% in April–June 2026, and forecasters expect 6.7–7.1% for FY27, Business Standard reported. The IMF forecasts China's growth at 4.4% in 2026 and 4.0% in 2027.
The catch is inflation. Retail inflation rose to 4.82% in August, a 20-month high, and wholesale inflation has been close to 10% since May. Fitch expects the Reserve Bank of India to raise its 5.25% policy rate in October.
What the big banks expect
Foreign brokerages remain positive but say oil is the swing factor, according to an Equity Research India round-up:
- Goldman Sachs targets the Nifty at 29,000 by the end of 2026, about 25% above the current 23,112.
- Morgan Stanley targets the Sensex at 95,000, but its bear case of 76,000 assumes oil near $100 a barrel.
- Jefferies targets the Nifty at 28,300 and favours lenders, autos, telecom and power.
Jefferies strategist Christopher Wood told Business Standard that, geopolitics aside, Indian stocks could return about 15% over the next year, in line with earnings growth, and that he prefers small and mid caps.
At stock level, analysts at Jefferies and Macquarie set ₹550 targets on BEL, while Nomura is neutral (BusinessToday). Citi rates Hitachi Energy and GE Vernova T&D as Buys; Jefferies holds GE Vernova at Hold on valuation.
Past winners are not all good value
A wider check of profitability, debt, valuation and past falls found four of the 18 leaders weaker than their share-price record suggests. Oil India's profits fell over three years; Prestige Estates and Amber earn returns on equity below 10%; and Data Patterns trades at about 92 times earnings with the weakest analyst consensus in its group.
Eternal also stands out: its shares rose 50% a year, but its return on equity is below 1% and it trades at more than 700 times trailing earnings, so its value rests on future profits from quick commerce.
Companies that score well on the broader measures but were not among the price leaders include Bharti Airtel, HDFC AMC, Mahindra & Mahindra, Shriram Finance, Glenmark Pharmaceuticals, Garden Reach Shipbuilders and Karur Vysya Bank.
Risks for the next two years
- Oil: a sustained move above $100 a barrel would raise inflation, weaken the rupee and hit consumer stocks.
- Interest rates: the US Federal Reserve raised rates on 16 September and the RBI is expected to follow, pressuring property and highly valued stocks.
- Valuations: six of the 18 leaders trade above 50 times forward earnings.
- US trade policy: the overcapacity investigation could add tariffs on electronics.
- Currency: the rupee fell about 20% against the pound over three years, turning the Nifty 50's 5.5% annual gain into a loss of about 2% a year in sterling terms.
How we did this
United One News analysed daily closing prices for about 270 NSE-listed stocks from 25 September 2023 to 25 September 2026 using Yahoo Finance data. Size groups follow AMFI's January 2026 cut-offs, applied to current market values. Analyst consensus and targets are from Yahoo Finance; profitability and debt data from Screener.in. Returns are price-only and exclude dividends.
This article is for information only and is not investment advice. Readers should consult a registered adviser before investing.
This story was produced with AI assistance and reviewed, edited and verified by the reporter before publication.
Covered by 1 outlet across the spectrum: 0% left, 100% center, 0% right.
Who is covering this story
- Center (1): United One News Community
Sources
- Grid, defence and exchange stocks led India's three-year rally as the Nifty 50 lagged — United One News Community (center, AI-estimated) ·