CAG indictment trips power stocks

It was a rough day at the bourses for power stocks with the CAG report being tabled in the Rajya Sabha on Friday. The report pointed to a notional loss of Rs 1.86 lakh crore to the exchequer in allocation and usage of coal blocks, making it a bigger scam than the 2G scam pegged at Rs 1.70 lakh crore.

The 25 companies that were allocated coal and named in the report included Reliance Power (RPower), Tata Power, Jindal Steel and Hindalco.

Power, steel and infrastructure sector stocks were affected with Reliance Power taking the worst hit.

UNDUE BENEFIT

In a separate report, the CAG said RPower got undue benefit of Rs 29,033 crore when the Government allowed use of surplus coal from blocks allotted to Sasan power plant for other projects. The scrip ended the day at Rs 87.70, down 5.85 per cent from its previous close on the NSE.

Other power stocks affected were Tata Power which closed at Rs 97.35 (down 3.85 per cent) and Adani Power which ended the day at Rs 42 (down 3.45 per cent).

Jindal Steel was down 4.29 per cent to close at Rs 401 and Hindalco fell 2.78 per cent to close at Rs 114.

SLAMS DEVELOPMENT FEE

In an another report, CAG slammed the levy of development fee on passengers using Delhi Airport; the Civil Aviation Ministry violated bid conditions for the benefit of GMR-led DIAL to the tune of over Rs 3,415 crore, the report added. Shares of GMR Infra tanked over three per cent.

Analysts tracking the power sector attributed the fall in these stocks to a “sentimental reaction” since the findings of the CAG report were already known before.

Angel Broking Analyst Bhavesh Chauhan said: “It was a knee-jerk reaction that led to the fall in these stocks and they should bounce back soon unless the situation takes a new turn in the next two days and some concrete action is taken by the Government to review the existing allocation or future allocation of coal blocks.”

“The uncertainty is bound to make both existing and potential investors nervous and sceptical and we expect the stock prices to remain muted in this sector,” he added.