CMIE, an independent think tank on the economy, estimates that projects worth INR6500bn (~US$145bn) are scheduled to be commissioned in FY11

This will be the highest ever annual capacity commissioning in the history of corporate India

Infrastructure segment is expected to account for highest share of incremental capacity creation

Electricity should account for >20% of the total capacity commissioning

This is in line with our view that investment cycle is set to return, and leading to earnings upgrades

Planning commission estimates that the GCF in infrastructure could be much higher at ~INR45750bn (~US$1000bn) in the XIIth Plan, with the GCF in Infra rising to 10.25% of GDP by the end of the XIIth plan

This would imply a doubling of the plan investments in infrastructure over the XIth 5-year plan

Private capex should be fortified by governmental push
for infrastructure

Indian companies' capex plans which had recoiled during the global liquidity crisis, seem at the threshold of a new upswing

Capacity utilization has started to creep up in FY10 and may lead to higher capex if demand remains robust

Going forward, we expect Indian power generation equipment market to witness a trend reversal. India could award ~95GW of equipment supplies over FY11-13e with ~35GW coming in FY11e.

Eoin Treacy's view India has a large number of positive attributes ranging from its impressive ability to produce world class companies capable of competing anywhere to the stability and respect for the rule of law and property rights stemming from its democracy. However, the slow pace of infrastructure development has long been a bugbear for investors tempted to compare India's progress with that of China. A pickup in the pace of improvement on this topic could contribute to a more bullish attitude toward the country from international investors.

The Indian government has taken a more focused approach to securing the resources needed to fuel the country's economic growth by lending support to companies competing for natural resource globally. It is now revealing plans for infrastructure development which follows the previous trajectory of improvement and supports the view that while slow, there is progress on this front.

The Sensex Index has been ranging between 16,000 and 18,000 since September and broke upwards yesterday. While the market has posted a positive return for the last six consecutive weeks and is a little overextended in the short-term, a downward dynamic would be required to check the advance and a sustained move below 16,000 would be needed to question the medium-term uptrend.

The Bombay Banks Index continues to lead the wider market higher and broke upwards last week. It has posted positive returns on the last eight consecutive weeks and a sustained move below the 200-day moving average, currently near 9250, would be required to question the medium-term uptrend.