On June 8, the S&P Bombay Stock Exchange (BSE) Power Index hit a 10-year high of 3,008. This level was last noted in intra-day trade, in the month of January of 2011.
The investors of power generation and distribution companies have been recompensed enormously 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. ACE Equity data shows that while the frontline Sensex Index has developed to be around 6 percent, the BSE Power Index added 17 percent during the period.
Adani Power on Tuesday, hit a record high of ₹151, on the back of heavy volumes. Meanwhile, both Tata Power and Torrent Power have gained over 4 percent each on the BSE.
According to Business Standard, in the past one week, the S&P BSE Power Index has surged 6 percent, against less than a percent gain in the benchmark index after Ministry of Power (MoP) released a discussion paper on the execution of Market-Based Economic Dispatch (MBED). It argues for the restructure of day-ahead scheduling of electricity in the country on a market based approach, in order to realize the framework ‘One Nation, One Grid, One Frequency, One Price’.
As per ICICI Securities, generation and distribution companies will be benefited by MBED. Since it is a wider-scoped Security Constrained Economic Dispatch (SCED), it will result in more efficient utilization of low cost generating capacity all over the country. In this way, tariffs for discoms and consumers will be reduced.
Ambareesh Baliga, an independent market expert and G Chokkalingan, the founder and chief investment strategist at Equinomics Research have suggested to purchase Coal India at current levels as most of the other power stocks have increased substantially.