As India braces for scorching heat waves, traders are on the lookout for stocks that can outperform in an overvalued market. The recent rally in shares of air cooler makers and power generators following the weather agency’s warning of hotter-than-usual temperatures has sparked interest in sectors that could benefit from the extreme weather conditions.
With millions of voters gearing up for a parliamentary election starting mid-April, the demand for products to tackle the heat is expected to surge. However, the market impact of the heat wave is complex, with risks of water shortage and crop damage potentially keeping food prices elevated and delaying the Reserve Bank of India’s rate cut.
Some sectors to watch include air cooling, energy companies, and consumer goods. Companies that make air conditioners, coolers, and fans are expected to see increased demand, with stocks like Voltas Ltd. and Blue Star Ltd. already posting gains. Energy companies like Adani Power Ltd. and Reliance Power Ltd. are also expected to benefit from the rise in power demand during the summer months.
Additionally, consumption of soda, ice creams, and dairy products is expected to jump during the summer, with companies like Hindustan Unilever Ltd. and Varun Beverages Ltd. likely to see increased sales. Analysts are also keeping an eye on Emami Ltd., which sells cooling products like Navratna oil.
However, the hotter summer weather also poses risks to the market, with potential strains on energy supplies and impacts on wheat crops. Companies dependent on groundwater may face challenges if the heat waves last longer than usual. Overall, the market is bracing for both opportunities and challenges as India prepares for a scorching summer ahead.
