Power stocks slip out of favour as investors rotate to cyclicals

Shares of Power Grid Corporation of India came under pressure in an otherwise firm market, declining and underperforming peers even as benchmark indices posted strong gains. The divergence points to a shift in investor preference rather than a broad-based reassessment of fundamentals.

Utility stocks, often seen as defensive plays, tend to attract flows during periods of uncertainty. With sentiment showing signs of improvement, investors appear to be rotating towards sectors that offer higher growth sensitivity, including financials and industrials. The relative underperformance of power stocks reflects this repositioning.

The move also underscores a familiar market pattern. As risk appetite improves, capital moves away from stable but slower-growing segments towards cyclical opportunities that stand to benefit more from an economic upturn. In this context, the weakness in power stocks is less about sector-specific concerns and more about changing market priorities.

That said, the shift may not be permanent. The underlying fundamentals of regulated utilities remain intact, supported by predictable cash flows and ongoing investment in transmission infrastructure. Any return of volatility could once again bring defensive sectors back into focus.

For now, the message from the market is clear. The preference is tilting towards growth, even if that shift is still cautious and contingent on global cues.