Sep 15- Green Stocks Ride Small, Mid-Cap Revival

Even as the lead market indices were down today, the underlying sentiment in the mid-cap and small-cap space, occupied by most of our green pack, was positive. That explains the broad trend of gains in most, other than the key solar manufacturers, which are on relatively stretched valuations. Shakti pumps continued from Friday with another strong day, on the back of another order in Maharashtra. Vikram Solar, the newest firm in the pack, had no such joy despite announcing a big order itself. We believe the markets need to mature up beyond these knee-jerk movements to better evaluate the lead time and margins on these orders, as firms share no such information on these aspects mostly. 

While the markets struggle with the issue of crossing key barriers, technical or psychological, be it 25200 on the Nifty, the broader issue is the pause in the rise of green developers, other than the usual volatility in Adani Green Energy. 

The announcement of a possible ALMM for wafer plan by the government will do little to add to a growing sense of unease at the thinking inside government. Buoyed by its perceived success in establishing a cell and module manufacturing base in India, the government is trying to carry over the same approach to wafer and ingot making, which frankly has more demerits than merits in the approach. Keep in mind that the success on module and cell making has come at a significant cost in terms of higher-end customer prices. A further rise in these costs post-2028, the new deadline for wafer ALMM, will do little other than perhaps add a new sense of urgency to complete projects before the cutoff date. Perhaps not a bad thing for many, but not ideal for the long term.

List of Green Stocks