Prediction of scorching heat creates winners in Indian stock market

Predictions of scorching heat across India are giving fresh fodder to traders as they hunt for stocks that can outperform in an overvalued market. Shares of air cooler makers and power generators rallied this week after the nation’s weather agency warned of hotter-than-usual temperature through the end of June. The sectoral advance comes amid concerns that the broader equity indexes lack momentum following a record-breaking rally. The coming months will also see hundreds of millions of voters attend campaign rallies and head to the polls in a parliamentary election that lasts for weeks starting mid-April. Such increased activity will likely amplify the impact of extreme weather and boost demand for products to tackle heat. While several sectors may benefit, the heat wave’s overall market impact is more complex. Risks of water shortage and crop damage may keep food prices elevated, potentially pushing back the timing for the Reserve Bank of India’s rate cut. A spike in energy demand could exacerbate power shortages in some regions.