The passing of the new Electricity Act has sent the stock prices of power generation, distribution and equipment manufacturing companies soaring, with companies witnessing a hike in the stock prices of up to 80%.

The impetus comes from the fact that the Act will enable power generation companies to sell directly to consumers at the retail level. Hence private sector power generation companies are likely to benefit the most from the reform that aims to improve efficiency in the sector.

The Act also encourages private participation in transmission and distribution (T&D) of power, which is also likely to influence positively T&D equipment manufacturing companies.

Investor interests however, have been largely propelled by the fact that the Act enables power companies to ensure a secure payment mechanism, which otherwise had to deal with bankrupt State Electricity Boards.