Power stocks are trading on a weak note with GVK Power & Infrastructure and Reliance Infrastructure leading the pack of losers. As per a leading financial daily, the Power Ministry has decided to allow power producers to pass on the entire fuel cost to consumers. This marks a significant change from the current tariff-based bidding system. In addition, the government has also agreed to allow developers to compensate for the coal shortage through imports and spot market purchases. The costlier power would be allowed to be sold in the open market. The amendments to the existing guidelines have come at a time when domestic power producers are facing a severe shortage of coal with about 20% of the country's power generation capacity lying idle. The new norms are likely to be implemented soon.
Engineering stocks are trading mixed. Bharat Electronics Limited and Carborundum Universal are the biggest gainers, while TRF Ltd and Manugraph India are the biggest losers. According to a leading financial daily, Bharat Heavy Electricals Limited (BHEL) is close to winning a contract from Pakistan. The contract worth Rs 10 bn will be to manufacture railway locomotives. The capital goods company has already started increasing its production capacity to fulfill demand for locomotives domestically too. At its Jhansi plant, BHEL now produces 50 locomotives per year up from the earlier 30. The company will increase this capacity further to 75-100. BHEL is looking at other export markets too for its railway business. Its existing export market stands at Rs 40-50 bn yearly.