Power Stocks Outperform In 2021
Dalal Street Investment Journal|May 24, 2021
The power sector is instrumental to the overall growth needs of India as a developing country. It assumes strategic importance and yet the sector has rarely been in the news for its wealth creation opportunities. Power stocks are known to provide stability to the portfolio, are less volatile and do provide good dividends to long-term investors. The DSIJ Team shares the major trends that may impact the fortunes of the power sector in 2021
Power Stocks Outperform In 2021

Adani Greens is ranked as the largest solar power developer in the world by US-based MERCOM Capital. The above factual statement by Adani Green shows the opportunities some of the companies in the power sector with strong balance sheets have for themselves in the new world which is environmentally conscious. In 2021 the power demand is expected to gradually improve and experts believe the growth in power demand will be in high single-digit, in line with the expected GDP growth. While the demand is expected to increase gradually, there are companies in the power sector that are contributing to a progressive new world with minimal environmental hazards while generating power.

There is no doubt that green energy is the way forward for several countries. Following are some of the major trends that may impact the fortunes of the power sector in 2021:

Policy Reforms

The Indian power sector has undergone a significant transformation that has reshaped the industry outlook via path-breaking policy initiatives like UDAY, Power for All, and UJALA, among others, over the last few years. The reforms introduced for the distribution companies (discoms) had witnessed limited financial success while the latest policy reforms like payment security mechanism, power-cut penalization, and the Electricity Amendment Bill will contribute primarily to bringing inefficiencies into the sector. India has already started the process of privatization of its power distribution territories in the Union Territories (UTs), with bids demanding for purchase of the entire 100 per cent stake in the Chandigarh discom.

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