India got the NSG waiver on 29 August 2008 and the stock market had one of its best days in recent times on 2 September. The euphoria has settled and it’s time now we look forward and ask “What will be outcome of an “N-abled” India on Indian stocks?”

The obvious is that the construction and maintenance of these proposed nuclear plants will mean a lot of new business which otherwise would never have happened. Which companies will benefit from this?

Well, the ones which have the know-how or can get access to know-how about some part of setting up a nuclear power plant. The only company in India operating nuclear power plants is the public sector Nuclear Power Corporation of India Limited (there is some interesting stuff on their website). The only problem for us investors – it’s NOT a listed company!

As per the current regulations, only public sector companies can enter the nuclear power area as in owning & running them. Other companies can supply and offer support services but cannot be directly involved in the operations.

The two companies that perhaps will benefit the most (from the investors’ point of view) are NTPC and L&T.

NTPC is India’s largest power producer and being a public-sector company will be able to setup, own and operate nuclear power plants. IT won’t be able to do this on its own and will look for and need the support of others with expertise to get into nuclear power.

One of the best Indian private-sector companies is Larsen & Toubro (L&T) which has world class design, engineering, construction capabilities. It already has the skills, proven technologies and experience to immensely benefit from the nuclear power plants construction activities. The company is even looking at building reactors for export!

On Monday, 8th Sep, NTPC stock jumped by 10.7% at its high and closed 4.3% higher at 181.5. L&T jumped 10.4% and closed 4.6% up at Rs. 2,737. (You can’t build a nuclear power plant in the 5 1/2 hours the markets are open you see!) These companies are off 34% and 42% off respectively from their life highs. But more to the point, those highs were reached when this nuclear opportunity was not factored in.

The initial set of new plants will come up around 2012. Which means between now and then, L&T will make quite a bit of money by participating in the design, construction etc of (some of) these plants. NTPC however, will make its money over the life of the plant as it earn out of the sale of electricity generated, so that’s at least 30 years. And of course, this is just the initial set of nuclear plants; there will be more to come.

So for the long term investor, (by that I mean the multi year, with a minimum 3 year time horizon), these are great companies to invest in. But if you want to look at (nuclear) energy and much else, these companies can invested in for probably at least 10-20 years. I have highlighted these two companies because I feel they are the best placed to take advantage of the new opportunity.

Of course there are many other companies that will also benefit, especially those in the energy, construction, capital goods, power transmission and related sectors. More on these later as the opportunity presents itself, but for now you can find some details here.

But lets not take things for granted … there is one more step till the Nuclear Deal will really open up and that is that the Indo – US nuke agreement will have to be ratified by the US Congress. This should happen on or before 23 September 2008. Watch this space for more on this theme.

As for me, I already have NTPC & L&T in my portfolio. I expect them to contribute substantially to a comfy retirement and here’s hoping for a nuclear boost to that

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In the meantime, I look forward to your questions, suggestions and well, anything else you have on your mind. Send them to askmusa@gmail.com

( Dr. Musa R Kaiser is a Bangalore-based doctor, equity investor, derivatives trader, investment advisor and most importantly, a financial educator who is passionate about supporting individuals and families achieve their dreams. He is the founder of the www.bangaloreinvestorsclub.com )