These stocks might be the winners this summer, from power generators to coolers

Forecasts of intense heat throughout India are providing traders with more material to work with as they search for equities that have the potential to beat an overpriced market.

Following a nationwide meteorological service warning of above-average temperatures until the end of June, stocks of air cooler manufacturers and power generators saw a spike in value this week. The sectoral increase coincides with worries that, after a record-breaking run, the wider equities indices are losing steam.
In addition, hundreds of millions of people will participate in campaign events and cast ballots in a weeks-long parliamentary election that begins in mid-April in the next few months.

The effect of harsh weather will probably be amplified by this increased activity, which will also raise demand for heat-resistant items.
The heat wave’s overall effects on the market are more complicated, even if several industries could profit. Food prices might remain high due to crop damage and water scarcity risks, which could delay the Reserve Bank of India’s rate reduction. In some areas, a surge in energy use can make power shortages worse.
Observe the following industries:
Air conditioning
In response to the weather alert, stocks of manufacturers of fans, air conditioners, and coolers moved quickly. This week, the stocks of eight evenly weighted manufacturers of air conditioning equipment increased by more than 8%.
According to Gaurang Shah, a strategist at Geojit Financial Services Ltd., “demand for consumer durables and white goods appliances is expected to go up, not only from metro cities but semi-urban, rural India.”
In contrast, during the previous five days, the benchmark NSE Nifty 50 Index increased by less than 1%. In comparison to the MSCI Asia Pacific Index, which is trading at a little over 14, the gauge is trading at a multiple of almost 20 times its 12-month forward earnings projection, which is higher than its own five-year average of 19.2 times.
Blue Star Ltd., Havells India Ltd., Johnson Controls-Hitachi Air Conditioning India Ltd., Voltas Ltd., and fan manufacturer Crompton Greaves Consumer Electricals Ltd. are stocks to keep an eye on.
“Our outlook on air conditioners is still positive,” Dolat Capital Market analyst Nikhat Koor said. She gave many explanations for the surge in demand, including low penetration, the development of residential and commercial projects, and consumer financing choices. She said in a memo last month that dealers anticipate a 15% to 20% increase in sales during the peak months through May.
energy firms
India’s meteorological bureau predicts that heat waves will, on average, last 10 to 20 days over the three-month summer, as opposed to the typical four to eight days. In some regions of the nation, the temperature often rises beyond 45 °C (113 °F) throughout the season.
According to the electricity ministry, maximum power consumption is expected to climb to 250 gigawatts over that time, up about 3% from the previous year. In addition, the government requested that companies keep importing coal to cover any shortage in local supply.
This week, the thermal power plant operators’ stocks, Adani Power Ltd. and Reliance Power Ltd., saw rises of at least 15% apiece.
final products
Summertime is usually when consumption of soda, ice cream, and dairy items spikes. By providing smaller-sized items at reduced prices, Indian businesses—particularly the bigger ones like Hindustan Unilever Ltd. and ITC Ltd.—have been concentrating on reviving demand in rural regions.
One of PepsiCo Inc.’s biggest global bottlers, Varun Beverages Ltd., saw increases of over 6% last week, bringing its total gains this year to over 20%. Dairy companies Hatsun Agro Product Ltd., Parag Milk Foods Ltd., and ice cream manufacturer Vadilal Industries Ltd. are some more equities worth considering.
According to Shah of Geojit Financial Services, “beverages companies are upbeat about the summer demand.” He also said that corporations are aiming to launch new products that cater to various customer segments.
Economists are also keeping an eye on Emami Ltd., a company that markets Navratna oil, which is often used in cooling massages.
meteorological dangers
Aside from possible market gains, a hotter summer might put a strain on the nation’s energy sources and harm wheat harvests. The IT centre of Bengaluru has been dealing with water shortages due to a drought even before the temperatures skyrocketed.
A number of states experienced protracted blackouts in 2022 as rising energy use due to heat waves coincided with declining coal reserves. Some businesses, particularly those that run large facilities, have had to halt operations in the past when water supplies dry up.
Extreme weather occurrences carry some danger, according to Jigar Shah, CEO of MIB Securities India. According to him, there would be major issues for supply chains and sectors that rely on groundwater if the forecast that heat waves will linger longer than normal comes true.