Shares of air-conditioner makers and power utility companies jumped up to 20 per cent in Monday’s afternoon trade, as forecasts of rising temperatures across India raised hopes of strong summer demand.
Among cooling-related stocks, Voltas gained more than 3.5 per cent to Rs 1,516.50, while Blue Star rose up to 5 per cent to Rs 1,904.40. Newly listed LG Electronics India climbed 1.75 per cent to Rs 1,619.70.
Among component suppliers and contract manufacturers, EPACK Durable surged as much as 20 per cent to Rs 279.33. Amber Enterprises advanced nearly 4 per cent, while PG Electroplast added 3.5 per cent.
The rally in stocks came after the India Meteorological Department (IMD) said heatwave conditions are likely to continue in some parts of northwest and central India for the next three days before easing.
The IMD said heatwave conditions are likely in parts of Vidarbha, Jammu & Kashmir, Himachal Pradesh, Haryana, Chandigarh, Uttar Pradesh, Madhya Pradesh, Rajasthan, Odisha, Gujarat, Rayalaseema, Chhattisgarh and north Telangana.
It added that hot and humid weather may prevail in isolated pockets of Konkan, Kerala, coastal Gujarat, Tamil Nadu and Odisha.
The weather department also forecast warm night conditions in parts of Haryana, Chandigarh, Rajasthan, Uttar Pradesh and Chhattisgarh.
The forecast of rising temperatures usually increases demand for room air-conditioners, air coolers and refrigeration products, helping companies across the cooling sector, including manufacturers and component suppliers.
According to the IMD, a heatwave is declared in plains when the maximum temperature reaches at least 40°C, and in hilly regions when it touches 30°C. It is classified as a heatwave when temperatures are 4.5°C to 6.4°C above normal, and as a severe heatwave when the departure is 6.5°C or more.
A heatwave can also be declared when the actual maximum temperature reaches 45°C, while 47°C or above is considered a severe heatwave.
For coastal areas, a heatwave is declared when the temperature is at least 37°C and 4.5°C above normal.
The IMD defines a warm night when the minimum temperature is 4.5°C to 6.4°C above normal, while a severe warm night is when it is more than 6.4°C above normal.
Power utility stocks also gained on hopes of increased electricity demand during the summer season. NTPC rose over 2 per cent, while Adani Power, Tata Power and JSW Energy gained between 2.50 per cent and 5.50 per cent.
Rising temperatures usually lead to higher power consumption as homes, offices and businesses use more cooling appliances, which can increase demand and support power generation companies.
