Shares of 10 companies operating in the power sector fell by 0.92% to 4.36% at 10:21 IST on BSE after the Supreme Court ruled that all coal block allocations post 1992 were illegal.
Reliance Power (down 4.36%), Adani Power (down 4.17%), Tata Power (down 3.15%), JSW Energy (down 1.90%), Lanco Infratech (down 1.85%), Reliance Infrastructures (down 1.38%), NHPC (down 1.17%), Power Grid Corporation of India (down 1.09%), Torrent Power (down 1.04%) and NTPC (down 0.92%), edged lower.
The S&P BSE Power index was down 1.45% at 2,049.68. It underperformed the BSE Sensex, which was up 42.82 points, or 0.16% at 26,479.84.
The S&P BSE Power index had underperformed the market over the past one month till 25 August 2014, falling 3.39% compared with 1.19% rise in the Sensex. The index had also underperformed the market in past one quarter, sliding 9.07% as against Sensex's 7.06% rise.
The Supreme Court on Monday, 25 August 2014, declared the allocations of all coal blocks from as far back as 1993 and until 2010 as illegal, but stopped short of cancelling them. Although the apex court did not take the severe step, it did inject a sense of uncertainty in the minds of both policy planners and investors. The ruling triggered a sell off in shares of power companies, which were allocated captive coal mines.
Cancellation of coal blocks could potentially plunge the power sector into a crisis as the disputed coal blocks reportedly account for a tenth of the annual coal output in the country. Moreover, because of limited domestic coal supplies, companies have had to resort to imports.
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