NTPC and Powergrid: Holding or Selling? Understanding the Energy Sector for Stellar Returns

Are you considering holding or selling your NTPC and Powergrid shares? In this article, we will explore the current state of these energy stocks and provide insights into the best course of action. Let's delve into the details and how these sectors are poised for recovery.

Stability and Recovery in the Energy Sector

Rest assured, the current uncertainty in the energy sector is temporary. With the economy stabilizing and demand picking up, both NTPC and Powergrid are expected to make a comeback. Unlike past uncertainties, the investment in these energy stocks is not anxiety-inducing but rather a strategic move towards a hopeful future.

Consolidation and Support Levels

Both NTPC and Powergrid are currently in consolidation phases. This period of stability is crucial as it allows the stocks to find and test support and resistance levels. NTPC, being the largest power generator in India, and Powergrid, a monopoly as a transmission utility, are strong contenders in the energy sector. If you wish to average your holdings through buying, Powergrid should be considered slightly below the 150 levels. This is because they seem to provide robust support in that area.

Given the current smaller quantities (

Government Support and Future Growth Prospects

Recently, the government introduced extra liquidity schemes to provide support to businesses that were under pressure due to the lockdown. This move is a significant step towards stabilizing the economy and supporting industries like NTPC and Powergrid. These companies play a crucial role in the power sector and are essential for the nation's energy security.

Let's take a detailed look at both companies:

NTPC (National Thermal Power Corporation)

NTPC is the biggest power generator in India. As a large-scale operator with vast assets, NTPC is expected to benefit from the economic recovery. With its strong financial position and diversified portfolio, holding NTPC shares can provide a solid foundation for your investment. My buy call on NTPC targets a price of 120-125 in the next six months. Holding for this period could yield returns of around 25-30%, which is quite substantial.

Target: 140

Powergrid

Powergrid, being a monopoly in the electricity transmission sector, holds a unique position. Given the essential nature of electricity in the coming decades, Powergrid is likely to maintain its dominant market share. As of now, Powergrid targets a price of 220 in the next six months. Unlike NTPC, Powergrid has a more stable and less volatile performance, making it a prudent choice to hold.

Alternative Investment Options

While NTPC and Powergrid are generally good long-term investments, you may consider exploring alternative options. If you wish to exit Powergrid and have the funds available, selling it and investing in Sterlite Technologies could be a viable alternative. Sterlite Technologies offers diverse growth potential across various segments of the energy sector.

Concluding Thoughts

With a holding period of roughly six months, both NTPC and Powergrid are expected to provide significant returns. The economy is on the path to recovery, and the energy sector is crucial in driving this growth. Despite short-term fluctuations, patience and strategic investment decisions can lead to substantial gains.

Stay informed, stay patient, and invest wisely. Your current shares will likely serve you well as the market stabilizes and demand recovers.