Green Stocks Jan 10: Retreat Turns To Rout As Selling Pressure Continues

Like a Self-fulfilling prophecy, days of continuous falls have finally established a pattern of more selling in green stocks as well. On the last day of the week, it was time for many investors to sit on the fence, hoping for even more drops, as the fall continued unabated. It was a day when the star of the past two weeks, Shakti Pumps cracked, with solar glass maker Borosil Renewables, another stock that had defied trends until recently joining in. For the rest, it was time to test new lows of the past few months, with manufacturers, EPCs and developers also feeling the pressure. The two wind energy firms in our group, Inox Wind and Suzlon, were particularly hard hit as the risks to wind projects in case of any slowdown in solar hit home. A string of new commissionings of capacity and project wins announced during the week have failed to stop the relentless selling or attract enough buyers back to green energy stocks. However, as we have stressed earlier as well, individual stories at most firms remain strong, indicating that while there might be a value mismatch in some cases, the underlying business remains strong for most.

In a sector that has gotten used to most key policy moves happening outside the budget, waiting for a decisive reversal of direction seems contingent on the broader market arresting its slide. While many stocks appear cheap relative to their 52 week highs this is not eh time to go fishing for bargains yet.