Power Stocks Surge Amid Peak Demand and Geopolitical Uncertainty

Market Update

On Friday, March 13, shares of power companies witnessed a significant surge in early morning trade, driven by a spike in power demand. This increase was in line with a 2.5% rise in the previous session. Several power stocks, including NTPC Green Energy, Adani Power, JSW Energy, and Tata Power, gained up to 1-6% in early trade.

Stock Performance

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• NTPC Green Energy shares emerged as the best performer, rising 6.5% in the last trading session and 12% previously.
• Adani Power stock jumped 3.5% after a 6% rise the previous day, while JSW Energy shares rose 2%, adding to its 6% gain in the last trade.
• Coal India and NTPC shares also rose marginally, hitting fresh 52-week highs on the BSE before paring gains to trade flat.

Underlying Factors

The gains in power stocks can be attributed to the peak power demand and anticipation of a harsh summer. According to a JM Financial report, evening power demand hit a record 224.6GW (up 7% year-on-year) at 7:00 PM on March 10.

Medium-to-Long-Term Outlook

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On a medium-to-long-term basis, demand for power remains high due to the growing push for data centres and electric vehicles. As the summer season approaches, electricity consumption typically rises significantly, while hydropower generation tends to decline. This results in power demand remaining on the higher side.

Investment Recommendations

For JM Financial, the pecking order for power stocks is: Adani Power, Tata Power, NTPC, Adani Green, Coal India, and JSW Energy. However, due to the heightened uncertainty in the Indian stock market, investors are advised to exercise caution and avoid picking stocks in the current market conditions.