India’s economy, the fourth largest in the world, is expected to grow 6 percent year. But the Indian equity market has stalled. The Bombay Stock Exchange’s SENSEX Index is flat for the past 12 months, and was recently priced at 15.5 times earnings. This is a discount to most emerging markets as well as its long-term average of 17.6.

The lack of enthusiasm has a lot to do with the Indian government’s new austerity program, geared to bring the fiscal deficit to less than 5 percent of gross domestic product (GDP). Through 2014, government spending is expected to drop nearly 20 percent, as subsidies for essentials such as cooking oil, sugar, kerosene and fertilizer are slashed or eliminated.

The new austerity has prompted some investment banks to lower their economic forecasts. Still, the consensus forecast of 6 percent growth is one of the highest among the G-20 nations.

So we shouldn’t write India off. Its economy is among the most diverse in the emerging markets, and the government is keen to nurture economically important industries. Below are promising equities in two key sectors.

Mining and energy. India’s biggest mining company, Sterlite Industries (NYSE: SLT), produces aluminum, copper, lead and zinc in India and also in Africa (South Africa, Namibia, and Liberia) and Australia.

Sterlite is also India’s largest crude-oil producer, responsible for about 25 percent of the domestic supply. And it is one of the largest electricity providers in the country, with plans to nearly double its annual capacity to 8.6 gigawatts (GW) during the next few years.

After a very strong fiscal 2012, ended last March 31, which saw a 25 percent jump in revenue and a 15 percent earnings increase, Sterlite stalled. The first nine months of fiscal 2013 have been a disappointment, with slightly lower sales and earnings, mainly due to the weak global economy.

We think the market has overreacted. Sterlite’s shares are down some 25 percent in the past year and are currently trading for around $6.50, just 0.7 times book value and sales, with a price-earnings ratio of less than 6. The stock currently yields 2.4 percent.

Sterlite’s prospects are likely to brighten again. Copper is a key commodity for the company, with India’s copper consumption accounting for nearly 40 percent of the world’s total. While copper demand has been weak over the past year, it’s starting to pick up along with the global economy.

A big and lasting boost to sales should come from developing countries as they continue to spend billions on roads and other infrastructure.

Generic drugs. India has long been the capital of generic-drug production, and its Supreme Court continues to assure that it will retain that dominance. In early April, for example, the court ruled against Novartis AG’s (NYSE: NVS) Indian patent application for cancer-drug Glivec, stating that the drug had essentially been developed in 1993, and its patent had therefore expired.

This decision is a big win for India- based Dr. Reddy’s Laboratories (NYSE: RDY), the country’s second-largest pharmaceutical company. While Dr. Reddy’s has been building its own patented-drug business, its “bread and butter” remains generics, including a generic version of Glivec, which sells for a fraction of the cost of the name brand.

The ruling will also benefit Dr. Reddy’s in the long run, since it made it clear that India will not grant patents to revamped existing drugs. Many major drug companies have resorted to presenting existing drugs as new patentable compounds by making slight changes to the molecular structure or the dosing.

Given the court ruling, Dr. Reddy’s can continue producing generic versions of medications that might otherwise have been off-limits due to newly issued patents. And this enhances the company’s prospects in India and other emerging markets, where patent protections aren’t as strong.

In the US, which is close to 30 percent of Dr. Reddy’s revenue, and other developed markets, this ruling doesn’t apply. So Dr. Reddy’s won’t be able to sell generic Glivec there. Still, Dr. Reddy’s is making steady headway in the US, where generics are now 19 percent of all subscriptions.

Analysts expect Dr. Reddy’s to grow 25 percent annually the next five years, almost twice the industry average of 14 percent. The stock was recently priced at around $34, near a 52-week high, with a price-earnings ratio of close to 24.