Power stocks go "off"

The light seems to have gone off power stocks.  NTPC is the worst hit – it has been hitting a new low virtually every day and today at Rs.107, it was a multi-year low; the last time it had hit this level was in July 2006. Its life-time low is Rs.68. The entire power sector index is down over 3.3% and of the 19 stocks tracked in the sector, only two – Thermax and JSW Energy are in the green. The rest, all 17 of them are down in the red.  Tata Power and GMR Infra are down almost 8%. Alstom is down 9%.

The reason for this mass selling on the counter is due to a recent report published by CRISIL. It has said that some 46,000 mw of power projects are close to turning unviable as most are plagued by problems of not being able to find long-term buyers for electricity, inadequate fuel supply and aggressive bidding, which turns project viability into a big question mark.

CRISIL has said that 20,000 mw of capacities are impacted out of 36,000 mw coal-based projects due to under-recovery of tariff. 10,000 mw of gas-based projects have become unviable because of dwindling fuel supplies from the Krishna-Godavari basin.