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As per SC verdict yesterday coal blocks awarded since 1993 are illegal. Negative for players across powers, metals, cement and capital goods players.

The Supreme Court(SC) on Monday declared allocation of all the 218 coal blocks made since 1993 as ―illegal and arbitrary‖ while also holding that the central government had no power of allocation under the relevant laws. However, the consequences of this declaration, particularly whether such allocations will be scrapped or not, will be considered on September 1 after further hearing by the court.

We believe the SC’s decision will hurt players across powers, metals, cement and capital goods players. The decision came during market hours yesterday and will remain an overhang on the stocks till further clarity emerges. We believe this to be negative for GVK power, GMR Infrastructure, Lanco Infra, JSPL, Visa power, Bhel etc.

Setback for Adani power and Tata power as SC stays compensatory tariff for both. Negative in short to medium term.

The Supreme Court(SC) has yesterday stayed an order allowing Tata Power and the Adani group to charge higher electricity tariffs on account of a rise in the cost of coal. This was in response to a petition by the power distribution utilities of Haryana, the apex court stayed the interim order of the Appellate Tribunal of Electricity (APTEL) on compensatory tariff, and asked the tribunal to finalise the matter expeditiously. We believe this to be negative for Adani power and Tata power in short to medium term.

Rajan cautions against debt waiver schemes

In his address at a conference of state secretaries, RBI Governor Raghuram Rajan has cautioned against the debt waivers proposed by some state governments such as those of Andhra Pradesh and Telangana. Governor pointed to the adverse impact of such schemes on the financial health of banks, whose capital needs had risen due to enhanced prudential requirements and deterioration in asset quality. During the recent Assembly and general elections, Andhra Pradesh Chief Minister had promised farm loan waivers. According to RBI norms, rescheduling of loans is typically allowed only if the crop yield is less than 50 per cent. For several districts across Andhra Pradesh and Telangana, this wasn’t the case.

Talk of ECB action grows as Germany’s business confidence dips

Mario Draghi has warned that low inflation — a sign of economic weakness — could be getting worse in Europe. He has underlined the sense of urgency by telling European governments to make a more coordinated effort to boost growth through tax cuts and a new joint investment program. Predictions that more ECB help will be needed were reinforced by a drop in Germany’s closely-watched Ifo business confidence index. It fell to 106.3 points in August, from 108 in July and below analysts’ expectations for a dip to 107.

U.S. manufacturing PMI reaches highest level since April 2010 The U.S. manufacturing PMI jumped to a reading of 58 in Aug14 from 55.8 in Jul14 to reach the highest level since Apr10.

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