News that the Centre will consider imposing higher duty on imported power equipments which may work to the advantage of domestic power equipment manufacturers perked up the stocks of domestic equipment makers such as BHEL and BGR Energy Systems today.
The feel good factor also rubbed on to power PSUs such as Power Finance Corporation and Rural Electrification Corporation Ltd. It was not merely the share price but also the volume that zoomed in these counters.
However, power generating companies such as Reliance Power, Adani Power and NTPC did not gain much value. The reason could be that the higher import duties will push up installation costs.
Even the relatively lower trading volume of the power generation companies reflected the relative impact of any government decision.
The MNC equipment producers Siemens and ABB also did not see much traction.
BHEL was the biggest gainer among the CNX Infra stocks closing at Rs 331, with a gain of Rs 15.25 or 4.83 per cent at close. This was probably due to the assumption that as the largest domestic power equipment manufacturer, it would gain the most due to imposition of any higher duty on imported power equipments. The counter registered a trading volume of 59.93 lakh shares on the NSE.
BGR Energy Systems Ltd, which is a private sector power equipment manufacturer that has been gnawing at BHEL's dominant position, was another beneficiary. The stock gained Rs 11.70 or 3.60 per cent to close at Rs 337.10. The huge volume of trading in the counter, 8.30 lakh shares were traded today in the NSE – reinforced the belief that any government decision on duty hike would benefit this company as well.
It is not clear if the rise in the scrips of power finance firms PFC and REC was due to the possible duty hike.
REC, which has been continuously losing ground from its year's high of Rs 383.40 in the NSE, had something to cheer today with the scrip gaining Rs 8.25 or 4.44 per cent to close at Rs 194 with a trading volume of 56.19 lakh shares. PFC also was a significant gainer with the share closing at Rs 165, a gain of Rs 8.95 or 5.74 per cent. The trading volume surged to nearly 74 lakh shares.
Though the NTPC CMD, Mr Arup Roy Choudhury, in a TV interview today, expressed the view that any decision to increase the import duty would have a “direct ramification on the price of power,” NTPC stock gained Rs 3 to close at Rs 178.95. But the trading volume was more modest 12.15 lakh shares.
Reliance Power recorded a high trading volume of 51.35 lakh shares but gained practically nothing. Adani Power was down by Rs 1.25 to close at Rs 85.70 with a trading volume of 7.52 lakh shares.
Multi-national power equipment maker Siemens gained Rs 6.30 to close at Rs 859 with a trading volume of 1.28 lakh shares, ABB was up by just 60 paise to close at Rs 673.50 with 1.02 lakh shares being traded.