Twenty two stocks from metal and power sector lost between 0.21% to 10.37% at 15:15 IST on BSE after the Supreme Court today, 25 August 2014 termed the method of allotment of coal blocks between 1993 and 2011 as illegal.
The S&P BSE Metal index was down 3.84% at 12,355.76. The S&P BSE Power index was down 0.87% at 2,085.53. Both these indices underperformed the Sensex, which was up 0.12% at 26,451.79
Among metal and mining stocks, Jindal Steel & Power (down 10.37%), Hindalco Industries (down 7.17%), Bhushan Steel (down 4.99%), Sesa Sterlite (down 3.29%), JSW Steel (down 3.44%), Tata Steel (down 3.59%), NMDC (down 1.55%), Steel Authority of India (Sail) (down 0.9%), Hindustan Copper (down 0.95%), National Aluminium Company (down 3.05%) and Hindustan Zinc (down 1.22%) edged lower.
Among shares of companies operation in power sector, Reliance Infrastructure (down 3.54%), Tata Power Company (down 3.42%), NTPC (down 0.21%), Reliance Power (down 3.49%), NHPC (down 2.51%), Jaiprakash Power Ventures (down 1.26%), Adani Power (down 3.91%), JSW Energy (down 2.92%) and Power Grid Corporation of India (down 1.08%) edged lower.
Among power finance companies, REC (down 4.73%) and Power Finance Corporation (down 4.6%) declined.
The Supreme Court today, 25 August 2014 termed the method of allotment of coal blocks between 1993 and 2011 as illegal but stopped short of deallocating the blocks that were awarded during the United Progressive Alliance (UPA) regime. The court said all coal block allocations were done in an illegal manner and it suffered from 'vice of arbitrariness'. While pronouncing its judgment on a batch of petitions seeking quashing of 194 coal blocks allocations during the previous Congress-led United Progressive Alliance regime, the apex court said no objective criteria was followed and guidelines were breached in coal block allocations. Reports further indicated that coal block allocation done by screening committee was not fair and transparent.
In a ruling that may come as a blow to several companies, the Supreme Court deemed all coal block allocations made since 1993 as illegal. The allocations had no objective criteria and no fair and transparent procedure, the judges said, adding they were impermissible. The quashing of these allocations still remains to be decided in further hearings. The court suggested the appointment of a panel of retired apex court judges to help the court in this matter. The case will be heard on 1 September 2014. The Supreme Court further disallowed exploitation of captive mines by ultra mega power projects, adding that captive mines cannot be used for commercial purposes.
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