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Jayanta Mallick

Kolkata, Sept. 11 Why are power sector stocks tripping after Monday’s high voltage illumination? Analysts are unanimous in saying that the blip has nothing to do with fundamentals, but with market mechanics.

“There were large build up in the power sector counters, which began before the last weekend and culminated in Monday’s spurt — all in expectation of the opening up of a new opportunity for the players after the Nuclear Supplier Group’s final waiver of the ban against India. The move was primarily sentimental. Profit booking followed and weaker hands, which had entered the melee, could not stomach the fluctuations in valuation and further depressed the prices,” said Mr Ajay Jaiswal of Microsec.

Except for Reliance Power and Power Grid to a certain extent, all — be it power generator, distributor or equipment manufactuirer — have witnessed a steep fall since Monday’s close.

According to Mr V.K. Sharma of Anagram Securities, like the rules, exceptions also showed disconnection with the fundamentals. “The short-term rise and fall were driven by psychology. The realisation, that the lightening up of the bottomlines would take time, dawned a little late,” Mr Sharma added.

Mr Arun Kejriwal of KRIS felt the current market sentiment and broad trading behaviour were not conducive to normal play of demand and supply. “When a market opens with a large upside or downside gap, it neither encourages buying nor selling, but draws a majority of the players to the sidelines,” he added. However, he felt, the fear of slowdown in global economy was becoming more real and its impact on the Indian equities was an uncertainty for the moment.

According to Mr Gul Tekchandani, a market strategist, a rumour regarding the Lehman Bros’ liquidation of holdings in India did the damage to the market today. “There is nothing fundamentally wrong with the Indian market or perhaps any particular sector. In fact, Indian opportunities have grown in the recent weeks compared to others,” he added.

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