The Weekly Stack 1st to 7th April

07 Apr, 20233 mins read
The Weekly Stack 1st to 7th April

Hey Stacker,

🏭 India's Massive Nuclear Power Expansion Plan Revealed

⏸ RBI's early pause: Surprising move as repo rate remains unchanged

🏦 Adani Green Energy: The Shocking Truth About Its High-Risk Stocks Exposed!

Read Time: 3 mins

1. India Goes Super Nuclear

India to Install 10 Nuclear Reactors Across Five States

India's Atomic Energy Minister has announced the installation of ten nuclear reactors in five states, with each reactor having a capacity of 700 MW. The reactors will be installed in a "fleet mode" progressively by 2031 at INR 1,05,000 crores. Public sector enterprises will be roped in for the installation of nuclear reactors.

Top 10 Nuclear Powered Countries
Top 10 Nuclear Powered Countries

Nuclear Power Capacity to Increase to 22,480 MW by 2031

The Indian government has given the green light to install 10 indigenous Pressurized Heavy Water Reactors of 700 MW each across five states in India. The Centre has approved the move, with administrative and financial sanctions. India's nuclear power capacity will increase from 6780 MW to 22480 MW by 2031 with the completion of these projects.

Our Opinion: Nuclear Power is one of the cleanest of sustainable power sources as compared with fossil fuels. This move along with the massive renewable energy capacity additions program of 500GW will go a long way in ensuring India hits its carbon emissions reduction target of 45% (1bn metric tons) by 2030.

2. RBI Pauses Rate Hikes

RBI takes a wait-and-watch approach in April policy

In a surprising move, the Reserve Bank of India (RBI) has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5% in the April policy meeting. Despite expectations of a 25 basis point hike, the RBI has opted for an early "pause" instead of a rate hike, with the aim of monitoring the impact of previous rate hikes on the economy, while maintaining the sustainability of the financial system. Although inflation is still high, RBI's monetary policy stance of "withdrawal of accommodation" aims to ensure that inflation aligns progressively with the target while supporting growth.

RBI surprises with an early pause instead of expected rate hike

Unlike other major central banks such as the West, which raised key rates despite banks' turmoil, the RBI is taking a different route. The decision not to hike rates further may instil some confidence in pushing credit growth and deployment, and make India more attractive as an investment destination. However, the RBI's "withdrawal of accommodation" suggests that the fight to tame inflation is not over yet, and there may still be room for rate hikes.

Our Opinion: The RBI’s move to pause the rate hiking cycle in this meeting was expected by some corners of the market particularly given the sharp deceleration in high frequency growth statistics over the past 2-3 quarters. It is clear that in the battle between prioritising price stability or growth, the RBI has for now decided to bat in favour of the latter.

3. Adani Green Energy Deemed Risky

Adani Green Energy Stocks Associated With High Risk

Leading Indian stock exchanges, NSE and BSE have announced that Adani Green Energy will be moved to the lower stage of the long-term Additional Surveillance Measure (ASM) framework from April 10. When a stock is placed under the ASM framework, it means that the exchange has identified the security as having a higher-than-normal level of risk associated with it.

Adani Group Stocks Recover After Facing Short Seller Allegations

Despite facing allegations of fraudulent transactions and share-price manipulation by US-based short seller Hindenburg Research, the Adani Group's 10 listed firms have ended the day in positive territory, with some hitting their upper circuit limits. The group has dismissed the charges as lies, stating that it complies with all laws and disclosure requirements.

Our Opinion: When investing in highly volatile non Futures & Options stocks, it is important to keep a watch for any regulatory actions taken by exchanges that try to curb volatility / stock manipulation. The ASM / GSM framework is one such measure that ultimately results in complete drying up of liquidity which, instead of protecting retail investors, actually ends up harming them as they get stuck in a stock without getting an exit.

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