Green Stocks Jan 13- Market Fails to hold Gains, as Hopes Rise On Trade Deal

It is instructive that among stocks in the green pack that made gains today, the most notable were Waaree RTL and Sterling and Wilson Renewable Energy, both EPCs about to announce results this week. Instructive because the chances of both delivering a strong set of numbers are high, which would make their current valuations look very attractive post results. So positions might be building up for that. However, a disappointment on that front could mean limited downside we would imagine, for the same reason that the current price seems to have covered that base as well. 

Movement in the other stocks to go up today seems irrelevant for now, as most of these have lost far too much ground to make a day's upmove really relevant. 

Increasingly, considering the wholly unpredictable nature of US moves on the trade front, and the absolute disregard for commitments, even if a trade deal does happen,  Indian investors would be better off not laying too much store by it. It is increasingly clear that the current administration considers every 'weakness' as a point of exploitation or negotiation, and is not averse to changing the rules midway. 

Beyond that, Q3 indicators and updates indicate business as usual for most stocks in the sector. Readers will be aware that even pessimistic analysts predicting overcapacity in solar manufacturing, or margins shrinking in EPC work, expect those signs to show up post Q2 of FY 27, or six months from now. A bigger signal the industry will be watching carefully is the impact on prices post the start of the ALCM regime in June this year. If prices do go up by up 30% as one end of the market believes, it won't be good news for customers or developers. The best-case scenario, of a 10-15% rise, is what the market can possibly digest, we believe, with top developers willing to pay that for quality modules. 

It also remains to be seen how much new cell capacity comes online between now and June in India, as a lower-than-expected number could seriously dent manufacturers' claims of being able to service local demand.   It is important that local supply is well above demand levels, for no other reason than to justify a level of choice for buyers domestically. Signals from China remain very confusing, as the removal of export incentives, seen as a positive for a price rise, is marred by the sharp projected drop in domestic demand in China, which will make local overcapacity that much difficult to manage for local producers.

List of Green Stocks