CAG audit: Coal India emerges as biggest gainer in sensex

MUMBAI: PSU major Coal India emerged as the biggest gainer among the sensex stocks in Thursday's sell-off during which the index lost over 400 points, thanks to the CAG's audit report that shifted the country's focus to coal.

Shares of the world's biggest coal miner gained 2.4% to close at Rs 339, while the index was pulled down by selling in stocks from sectors like cement, steel and power, that use coal as primary raw material.

The slide in these stocks came as market players believe that the report may eventually lead to a hike in coal prices. "The CAG report is positive for Coal India. The stock may go up to Rs 350 level and, thereafter, it faces some resistance. The report has raised some big issues and it will affect everyone and may lead to further investigations , (like) cancellations of coal blocks as in the 2G case," said investment advisor S P Tulsian.

India is the third-largest coal producer in the world after China and the United States, and Coal India is the world's largest coal producer. Last fiscal, its output stood at 440 million tones of the fuel.

However, what is being perceived to be a gaining proposition for Coal India could turn out to be a burden on power, steel and cement firms. Shares of Reliance Power, Adani Power and Tata Power lost between 6% and 4%, while state-run NTPC was down 2%. Among steel firms, Jindal Steel & Power and JSW Steel crashed over 7% each, while Tata Steel and PSU major SAIL were down by over 4% each. Similarly, in the cement sector, Ambuja Cement and ACC were down over 3% each, while Ultratech was down 2% and Century Textiles lost over 5%.

In February, the government had asked Coal India to sign fuel supply agreements (FSAs) with power producers by March 31, which has not gone down well with some of the independent directors on its board and also some of its shareholders.

UK-based The Children Investment Fund Management (TCI), Coal India's second largest shareholder after the government with 1% stake, last week threatened to take legal action against the Coal India board for not protecting the interest of minority shareholders and for following government instructions.