Green Stocks May 20- Stocks Shed Gains In A Jittery Market

Borosil Renewables Plunges While Most Green Stocks Record Marginal Increase

After what seemed to be the start of a new push to recover lost ground, green stocks faced what seems to have been a false down, as all corrected today. Other than that contrarian pick Gensol, which of course is a punter’s stock for now as it heads for the bankruptcy court.

The drop was particularly painful for Acme Solar, which released good results yesterday, even as other stocks got off with relatively lower losses. The downturn was secular, sparing none in its wake, indicating broader issues ahead than just the green sector. These are global factors like the US markets, as well as worries over the mood of large investors who haven’t yet faced selling pressure to pull out money at scale from emerging markets.

Happening as it does just when the market was beginning to find a base for a fresh push, and possibly more fundraising plans by green energy firms, market watchers will be watching anxiously to see how long this ‘correction’ lasts. It will be in everyone’s interest to see a measure of stability in the markets, even if it doesn’t really gain much, to allow firms to move ahead on fundraising plans.

The good news is that the interest rate environment continues to be benign or favouring a further drop in cost of funds, which will be welcome news. Key green stocks with significant scale in our pack are comfortably placed when it comes to debt, from zero debt to lower debt equity ratios, that give them significant scope to raise funds at a lower cost in the near future to meet expansion plans.

That, to our mind is a definite additional plus, which will compensate the larger firms somewhat in lieu of the softer prices in case of manufacturing firms, as well as margin pressure in case of EPC firms.
It will also be worth watching if the payments situation vis a vis government-owned entities continues to look up, as it has over the past two years, to further ease the pressure on firms to borrow for their working capital needs. With most of the week ahead of us, there really is no place to hide if you were hoping to see the worst of the selling pressure. The rest of the week should be a ride for sure, though whether it turns out to be a rough ride or a joy ride, we will know by this time on Friday.

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