Green Stocks Mar 18: Memories Of The Good Old Days

As the markets rebounded strongly today, it was all green for our green energy pack as well. As we have been stating, it was a combination of value buying and reduced selling pressure that drove up interest today. Investor favorites like Shakti Pumps (up 5% at UC) gained strongly, while out of favor Gensol was the sole loser, down another 5%. In the latter’s case, a fall below even Rs 200 doesn’t seem unlikely or impossible considering it is just 4-5 more lower circuits away.
If anything, the green packs seem to have trailed the mid-cap, and small-cap indices, which have risen over 2% today. That is a little worrying, indicating that the pack may not find it as easy to beat the market should it recover strongly anytime soon. A rotation out of green stocks for many punters would hardly be a surprise, considering the unpleasant experience with Gensol, or even the IPOs of Acme Solar or even NTPC Green, for that matter. That means a rise in borrowing costs for many firms that would have hoped to go public at a rich valuation, as they wait for a more opportune moment. However, we believe that a relative return to stability should also encourage quality firms to head for the markets rather than defer plans, even at a lower valuation they expected. Strong performances will always be rewarded eventually, and it will take just a few more quality firms before India gets its own Green Energy index perhaps, opening up a whole new avenue for slightly more conservative investors to take an exposure to the sector.