Adani Power shares jumped around 3.5% to hit a fresh 52-week high of Rs 220.29 apiece on Monday morning. Shares of the company have skyrocketed around 48% from March 30’s low of Rs 149.20 apiece, adding nearly Rs 1.4 lakh crore to its total market capitalisation during the period to raise it to nearly Rs 4.25 lakh crore.
Tata Power shares, meanwhile, jumped nearly 4% to hit a fresh 52-week high of Rs 452 apiece on Monday morning. The stock has rallied 20% in one month, adding around Rs 24,000 crore to its market capitalisation to pull it up to nearly Rs 1.45 lakh crore.
Soaring temperatures
The India Meteorological Department (IMD) issued a heat wave alert for parts of northwest and central India on Sunday, warning that the high temperatures are likely to continue over the next three days. The weather department said heat wave conditions are very likely in isolated pockets of Jammu & Kashmir, Punjab, Haryana, Chandigarh & Delhi, Uttar Pradesh, Rajasthan, West Madhya Pradesh, Vidarbha, Bihar and Gujarat on April 27.
Banda in Uttar Pradesh recorded the highest maximum temperature at 47.4°C on Saturday, according to IMD data. Daytime temperatures across most parts of the country were in the range of 40°C to 45°C, except the Western Himalayan region, northeast India, the west coast and southern parts of Peninsular India.
Mega El Nino ahead?
India is sizzling amid soaring temperatures and heatwaves, with experts sounding the alarm over strong El Nino conditions weighing on rainfall in the latter half of the year. El Nino years are marked by an unusual warming of the central and eastern Pacific, which alters atmospheric circulation and weakens monsoon winds over the Indian subcontinent. The National Oceanic and Atmospheric Administration (NOAA)’s Climate Prediction Centre has recently predicted 50% chance of a “strong” or “very strong” El Niño in the coming months.For context, even the weak El Niño year of 2009 saw a sharp drop in India’s rainfall to 78.2% of a long-period average, the lowest in 37 years. Hence, the expected strong El Niño conditions are raising concerns.
While the soaring temperatures raise concerns about people’s health as well as several other sectors in stock markets, heightened power demand will likely boost the power stocks. JM Financial, in an earlier report, explained how power demand peaked during the previous El Niño years. It highlighted that the El Niño during 2015 led to an extended hot and humid weather up to October 2015. Peak demand grew 4-5% during September-November versus 1% in FY16 during that time. During the summer of April–June 2019, another El Niño year, the average temperature was 2.8°C higher on 64 days out of 91 days. Peak demand grew at an unprecedented 7-9% during April-June of 2019, it said.
Also read: India Cements shares soar 10% as Q4 net profit rockets 300%, revenue up 3%. Check details
Later in 2023, El Niño-driven dry conditions led to a five-year low in monsoon rainfall (94% of LPA) with extreme hot and humid conditions during June-August 2026. “All in all, we anticipate a shortfall in hydro generation (negative for NHPC, SJVN), spike in coal-fired generation (positive for NTPC, Adani Power), extension of Section-11 (Tata Mundra) and high merchant prices (Adani Green, Adani Power),” the domestic brokerage concluded.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
