Temperatures have seen an unusual rise as spring gradually fades away to welcome the summer season. The World Meteorological Organisation (WMO) has said that there is a widespread signal for above-average land surface temperatures during the March-May period due to various climatic conditions.
Within the first 10 days of March, the weather department has issued three heatwave warnings for Mumbai. Temperatures in Delhi remained heightened as well, along with other key cities. Rajkot in Gujarat recorded 42°C on Tuesday, topping charts this year so far.
This has led to higher power demand across key Indian markets. According to a report by JM Financial, evening power demand hit 224.6GW at 7 pm on Tuesday, the highest ever recorded for March.
Due to the unavailability of solar power during that time, supply was mostly supported by wind, hydro, gas, nuclear and coal operating at utilisation of must-run, 67%, 28%, 87% and 95% respectively, the domestic brokerage added.
“Given the current geopolitical developments, we envisage a higher probability of a scenario of persistently high LNG prices and intense summer leading to a spike in coal-fired generation to meet evening demand,” it said. “There is a high probability of a shortfall in hydro generation during the upcoming summer due to a deficit in winter rainfall and snow cover. Shortages in LNG supplies add to supply challenges, impacting gas-fired generation (9GW capacity, currently online). Hence, we expect implementation of Section 11 or some other mechanism to enable operationalisation of ICB along with continued higher utilisation (PLF) of existing thermal power plants,” it added.
Stocks likely to benefit
JM Financial analysed 16 stocks from its coverage, spanning utilities and equipment manufacturers. Accordingly, it has revised its top five utility picks for this summer with a pecking order of Adani Power >Tata Power >NTPC >Adani Green >Coal India >JSW Energy.Also read: AI euphoria: How India’s old economy is giving FIIs a safe hiding place
NTPC Green shares rallied more than 15% to trade at Rs 99.90 apiece, the highest level seen by the stock since November last year. Tata Power and Coal India shares jumped around 5% each, while NTPC shares gained more than 2%. Adani Power shares rallied more than 9%, JSW Energy surged over 8%, and Adani Green Energy jumped over 3%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)