Green Stocks Sep 2- Market Applies Brakes On Runaway Stocks

As expected, markets struggled to keep the momentum going, even as it was a creditable day if you are a bull who believes the worst is behind us. However, we can't agree with that view just yet, and continue to advise caution at an especially volatile time for the markets. 

The day was marked by a sharp contrast between the first and second halfs, as multiple green stocks registered strong gains in the former, only to give most of those up in the second half.  

In fact, most of the movements today can be put down to the kind of value hunting we have spoken of earlier, where a lot of the stocks in our pack seem to offer very limited downside from these levels, with the promise of a sharper gain if the market recovers. 

With the US-India situation as muddied as ever, it remains a foolish idea to make any bets on an early resolution of that issue. What has probably lent support to the market, as seen in the sharp rise in EV-linked stocks yesterday and today, even, is the easing of tensions with China, especially an apparent Chinese willingness to ease restrictions on vital equipment ranging from rare earth magnets to even Tunnel boring Machines. Restrictions on the latter, made in China by a German firm, have led to significant delays in underground tunnel construction, especially on metro lines in India.

So what could be the decisive kicker the market would need? It remains a clear, logical GST rationalisation, removal of the 25% additional tariff from the US, and any reform that makes India's bureaucracy more accountable for outcomes. Only the first looks like a real possibility in the short term, and for that reason, we believe any market upside is capped. Our green pack remains best placed to offer a limited upside as compared to many other sectors, although we expect a muted Q2 performance due to the long, heavy monsoon rains. Bed in for a six-month period and you might be well rewarded. But don't even think about a week-long investment of the sort that worked wonders last year. Look at how prices in Vikram Solar have corrected within a week; if that isn't a warning enough.

List of Green Stocks