The Sensex and the Capital Goods Index were around 20,000 in January 2008. While the Sensex is at a much higher level now, the Capital Goods Index has not moved much. Massive capacity addition by Indian companies during the boom of 2005-08 is the main reason for this underperformance. As the economy did not grow as expected, these excess capacities remained in the system.
After burning their fingers, companies became more prudent about
