An attendant looks through the circuits of an AC/DC locomotive train engine manufactured by Bharat Heavy Electricals Limited, which is used by Central Railways, on the outskirts of Mumbai, India. (Photographer: Abhijit Bhatlekar/Bloomberg News)

Power Stocks Drive India Market Rally 

(Bloomberg) -- Power stocks, including utilities, helped drive Indian shares higher after the sector regulator released draft tariff regulations for the next five-year period that some analysts said weren’t as negative as the market expected.

The benchmark S&P BSE Sensex climbed 0.9 percent to 36,270.07 in Mumbai, its highest level since October 1, data compiled by Bloomberg shows. The NSE Nifty 50 Index advanced 0.8 percent.

India’s Central Electricity Regulatory Commission proposed keeping a 15.5 percent return on equity for generator and transmission companies for the five years starting April 1, according to draft tariff regulations dated Dec. 14 and posted on the regulator’s website.

The return on equity dilution for companies is lower than what is being factored by current market valuations, Swarnim Maheshwari, Mumbai-based analyst with Edelweiss Securities Ltd. wrote in a note. The draft rules allayed fears of a cut, it said.

The Numbers

  • Thirteen of the 19 sector indexes compiled by BSE Ltd. climbed, led by gauges of metal and energy shares.
  • Housing Development Finance Corp Ltd. and HDFC Bank Ltd. gave the biggest boosts to the benchmark, while Power Grid Corporation of India Ltd. was among the top performers on gauge.
  • Vedanta Ltd. rose as much as 6.3 percent after the National Green Tribunal ordered restart of its copper smelter, which was shut since March.
  • The India NSE Volatility Index declined for a fifth day, closing at its lowest since Sept. 19.
Power Stocks Drive India Market Rally 

Strategist Views

  • “With the main event of state elections behind us, investors are focusing on stock-specific action,” said A. K. Prabhakar, head of research at IDBI Capital Market Services Ltd. “Expect metal stocks to do well given the developments in the U.S.-China trade discussions.”
  • “We expect Nifty to trade in a range as we approach the year-end holiday season and in the absence of any major local or global cues,” said Rupak De, an analyst at Bonanza Portfolio. “We expect a range of 10,650-11,000 on the NSE Nifty 50 Index in the short term.”

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