Capital goods stocks slide as China firms enter tenders 2026

What triggered the sell-off in capital goods

Shares of listed power equipment and capital goods companies came under sharp selling pressure after a government decision opened the door for four Chinese-linked manufacturers to participate in government tenders for critical domestic power projects. The development, reported by Reuters citing a government order, hit investor sentiment as the market priced in the risk of tougher competition in public tenders. The selling was most visible in companies seen as exposed to transmission and grid equipment orders.

The policy change at the centre of the move

According to the Reuters report, India allowed four Chinese power equipment manufacturers with factories in the country to bid for government tenders for critical power projects. The companies named were TBEA Energy, Nanjing Electric India, New Northeast Electric India and Taikai Electric (India), as per the order referenced by Reuters. The exemption was reported as India accelerates expansion of its transmission network to support rising electricity demand and renewable energy additions.

How the market reacted on the day

The initial reaction was a broad-based drop across heavy electric equipment and related stocks, with declines reported as high as 10.5% in Friday’s trade. GE Vernova T&D India, Hitachi Energy India and Siemens Energy India were among the most affected counters, alongside other capital goods names.

Key stock moves: GE Vernova, Hitachi Energy, Siemens Energy

GE Vernova T&D India was among the biggest laggards, with reports noting declines up to about 10.5% during the session. Hitachi Energy India and Siemens Energy India were also hit hard, with intraday falls cited as high as 9% and 8%, respectively, in one market update. Another report described Hitachi Energy India and GE Vernova T&D India as down about 10% each in intraday trade.

Broader overhang: easing of 2020 curbs on Chinese bidders

The selling pressure was reinforced by a separate Reuters report that India’s Finance Ministry planned to lift a five-year-old restriction on Chinese companies bidding for government contracts worth USD 700-750 billion. The report said officials were working to remove the registration requirement, and that the final decision would rest with the Prime Minister’s office, citing two unnamed sources. The restrictions were imposed in 2020 and were linked to security clearance and committee registration requirements for bidders from countries sharing a land border with India.

Why investors worry: bidding intensity and margins

Market concerns centred on competitive intensity in PSU-led tenders, particularly in power equipment, transmission and railway-linked projects. ICICI Securities flagged sensitivity for companies more dependent on government orders due to the risk of pricing pressure and potential margin compression if competition rises. Crisil Ratings also described the power transmission and distribution segment as intensely competitive, noting that large orders are typically procured through competitive bidding that can pressure profitability.

Timeline and key data points

Conflicting signals: broker views and order-cycle optimism

Not all commentary was uniformly negative. A separate market segment referenced broker calls from Citi, JP Morgan and Macquarie, all maintaining buy or overweight ratings on Hitachi Energy. The same commentary cited expectations of more LCC orders in the pipeline and described Hitachi Energy and GE Vernova as likely beneficiaries of a multi-year domestic T&D cycle led by renewables, alongside strong global demand.

Market impact: what changes when Chinese bidders return

The immediate market impact was a risk-off move in the stocks most directly tied to power equipment tenders, as investors reassessed near-term pricing power. In a tender-driven business, the entry of additional qualified bidders can push bids lower, especially when procurement is largely competitive and standardised. Separately, the policy consideration was also framed as an attempt to address project delays and supply constraints across power, railways and broader infrastructure, which can shift bargaining power towards buyers.

Analysis: why this matters for the sector

Two storylines collided in the tape. One is the strong underlying demand backdrop, including grid expansion and renewable integration, which has supported large order inflows and capacity additions. The other is the procurement and competition risk, where even the perception of a policy shift can drive valuation and sentiment swings in capital goods names. The reported USD 700-750 billion government procurement universe, and the specific inclusion of four China-linked manufacturers for critical power tenders, explains why the sell-off spread beyond a single stock.

Conclusion

Capital goods and power equipment stocks fell sharply after reports that India allowed four Chinese-linked manufacturers to participate in government tenders for critical power projects, and as markets weighed a broader possible easing of 2020-era procurement curbs. The next key marker is any formal clarity on the scope and duration of exemptions, and whether the Finance Ministry proposal referenced by Reuters progresses to a final decision by the Prime Minister’s office.