The Hindu Business Line : Negative sentiments pull down power stocks

Mumbai, Jan. 16 Power sector stocks are trading lower due to over all negative sentiments in the markets, say analysts. The sector is at its lowest point since the beginning of the year.

The BSE Power index was down 3.67 per cent today, with 12 stocks declining and only two stocks advancing. Just a week ago this sector had touched its highest ever figure of 4929.34 and today it is down 7.39 per cent from that figure.

The sector closed the day at 4462.33, which is 169.94 points down from Tuesday’s close. Reliance Energy, which was down 4.14 per cent, NTPC (5.55 per cent) and BHEL (4.42 per cent), were among the top losers of the day.

The other power sector stocks that took a beating today were: Tata Power (5.63 per cent), GVK Power and Infrastructure Ltd (2.22 per cent) and GMR Infrastructure Ltd (1.36 per cent).

Global cues

“In the power sector we are witnessing basically profit booking. With the global cues being negative with banks like CitiGroup writing off crores worth of assets, there are a lot of negative sentiments in the world markets. They are expecting other global banks like UBS also to come out with similar news. There is also re-rating taking place in the power sector,” explained Mr Sanjay Someshwar, Sub-broker, Ventura Securities.

Market watchers believe that there is a certain amount of re-rating taking place due to the Reliance Power IPO. “There is short-term re-rating happening in case of power generation stocks and its only because of the hype and frenzy created around Reliance Power IPO,” said Mr Ankit Babel, analyst, Dolat Capital Markets Ltd.

But the Senior Vice-President, Research at Keynote Capitals Ltd, Mr Nitin A. Khandkar, believes that re-rating of the power sector has taken place a long time back.

Positive sentiment

“Re-rating of the power sector has taken place over the last year. Valuation of the Reliance Power IPO seems to be riding on the positive sentiment for the power sector. The sell off in the power sector over the last few days is attributable to the sell off in the markets overall,” he explained.