BSE Power index hits over 10-year high; profit booking advised by Analysts
Published On: Tuesday, June 8, 2021 | By: Team KnowMyStock
Shares of power generation and distribution companies have rewarded investors handsomely over the past two months with returns of Reliance Infrastructure, JSW Energy, Adani Power, Power Grid Corporation, NTPC, Tata Power, and Torrent Power ranging between 8 percent and over 90 percent. In comparison, the frontline Sensex index has advanced around 6 percent while the BSE Power Index added 17 percent during the period, ACE Equity data show. On Tuesday, the S&P BSE Power index hit a 10-year high of 3,008, a level last seen in January 2011, in intra-day trade. Among individual stocks, Adani Power hit a record high of Rs 151, soaring 19 percent in intra-day trade on Tuesday, on the back of heavy volumes while Torrent Power and Tata Power gained over 4 percent each on the BSE. In comparison, the benchmark S&P BSE Sensex was down 0.17 percent.
In the past one week alone, the S&P BSE Power index has surged 6 per cent, against less than 1 per cent gain in the benchmark index after Ministry of Power (MoP) released a discussion paper on the implementation of Market-Based Economic Dispatch (MBED) which argues for redesigning of day- ahead scheduling of electricity markets in the country on a market based / integrated approach in order to realise the ‘One Nation, One Grid, One Frequency, One Price’ framework.
Analysts, however, warn against chasing the “exuberance” rally and suggest booking profits as data for power consumption remains weak when compared with historical average.
"Investors should wait for a good correction to enter the stocks as this rally is due to the overall exuberance in the markets… I am neutral on the sector and would advise investors to book profits," say some experts.
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