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As per SC verdict coal blocks awarded since 1993 are illegal. Negative for players across powers, metals, cement and capital goods players
The Supreme Court(SC) has 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 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 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.

Government has ordered forensic audit of UCO Bank- Negative from short term perspective
The government has ordered limited forensic audit into some non-performing accounts of Kolkata-based UCO Bank to find out any irregularities in sanction of loans. Complaints were filed with regards to some accounts which have turned non-performing. This is the fourth public sector bank where forensic audit is being conducted post Syndicate Bank, Dena Bank and OBC. We believe the stock to remain under pressure in short term and advise investors to prefer large cap names like SBI and BOB in order to play the economic recovery cycle. Besides, the stock has also been excluded from CNX Midcap Index.

Govt. proposes oil cess be used for subsidy
The Oil Industry Development (OID) cess, levied on oil producing companies since 1974, is likely to be used for sharing the subsidy on petroleum products. The cess is levied on the nominated fields of ONGC and Oil India. The petroleum ministry has proposed the two upstream companies be relieved of the subsidy burden to the extent of the OID cess. The ministry has argued the cess be used to facilitate more investments in exploration and production.

ADB to provide up to $9 bn loan to India over 3 years
Committing to support infrastructure development in India, Asian Development Bank to provide up to 7-9 billion loan to the country over the next three years. Besides, the multilateral funding agency will provide around $30 million for technical assistance grants, especially for building institutions and capacity at the state as well as the local levels.

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.

U.S. Consumer Confidence Continues To Rise
Consumer confidence in the U.S. improved for the fourth consecutive month in August, with the consumer confidence index jumping to its highest level in almost seven years. The U.S. consumer confidence index jumped to 92.4 in August, the highest level since October 2007, from a revised 90.3 in July. The consensus estimate of economists called for a small retreat in the index to 89.5 from the reading of 90.9 initially reported in July.

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