AI, Energy, and the Indian stock market.

AI, Energy, and the Indian stock market.

AI in the headline is clickbait in this topic, or maybe not, because I will come into it at later part of my post, but first I will start with my investment at NHPC (National Hydroelectric Power Corporation), a Public Sector Undertaking Company. Public Sector Undertakings or PSU are the companies in India, which are not owned directly by the Government but government (State and Central) will be owning more than 51% stake i.e controlling stake in the company. Anyways, I made my investment earlier in it and it statrted down trending and keep going down from my buy purchase.

Source

Actually, I missed the opportunity and performed very hasty decision in buying it when it was going down. After purchasing it, I checked the reports after a couple of days of my buying that pointed out that even though company is profitable, but their Year on Year growth on profit showed negative. On top of it, for a long term its profit amount is not growing with strong numbers. Company has still not able to start its projects for generating electricity that are supposed to start on April 2025. Also they are disbursing money to settle the claim from the previous years that were pending for a long time.

Analyst and market sentiments, suddenly become nagative and it's started tanking. If I had researched this before buying, I guess I might be be buying it at price range of 77.5 instead of 79.75. So anyway, I lose money in making hasty decisions.

7% rule of stop loss.

After learning about negative reports, I just wondered whether I should get out at a loss. Market guru or proven strategy suggests that you can exit if it goes below 7% of your purchase price. I also checked how is "electricity" production capacity in India, and I was actually surprised to learn that India is currently self-sufficient in electricity demand. Also, it looks like there is still scope for expanding capacity in future, so it definitely have a future.

AI and electricity demand.

Source

AI systems, particularly large models and data centers, require vast amounts of electricity. Training advanced AI models can consume as much energy as hundreds of homes in a year, and large data centers—the backbone of AI services—are expected to significantly increase power consumption over the coming decade. With the more data needed to analyse, capacity of the either existing data center needed to be increased or new data center to be created. For providing energy to the data center, electricity production need to scale and these company will get a market to sell their increased capacity and that will help in increasing their profits.

For me, I was looking for short-term profits, and I guess, once I get little profit from this trade, I will exit now but when I have spare capital, I might get into it again in good valuation or maybe further research in this sector, and maybe put some money in that company.