Shares of power and sugar companies surged in the morning trade on Tuesday after the Supreme Court quashed the Reserve Bank of India’s February 12 circular via which the banking sector regulator had asked banks to take defaulting power, sugar, shipping and other sector companies to insolvency.
At 10:50 am, shares of Tata Power were trading over 2 per cent higher at Rs 76 apiece while those of Adani Power gained 3 per cent. NTPC was trading nearly a per cent higher at Rs 136 while Power Grid was ruling nearly 2.50 per cent at Rs 200.45.
Select sugar stocks, too, rallied in the trade. EID Parry was trading over half a per cent higher at Rs 206.60 apiece on BSE while Sakthi Sugars was up nearly 3 per cent at Rs 11.49. In comparison, the benchmark S&P BSE Sensex was trading flat at 38,908, up 36 points.
Power companies such as Essar Power, GMR Energy, KSK Energy, and Rattan India Power as well as The Association of Power Producers (APP) and Independent Power Producers Association of India had in August moved the Supreme Court, challenging the constitutional validity of the February 12 circular of the RBI.
On February 12, 2018, RBI had asked banks and other lenders to either execute a resolution plan for big stressed accounts or file insolvency petitions against them in the National Company Law Tribunal (NCLT). The banking sector regulator in this circular had allowed 180 days for debt resolution, failing which the asset would have to be taken to National Company Law Tribunal (NCLT) for initiation of insolvency against them. The deadline got over on August 31, 2018.
State-run banks also gained during the session. Union Bank rose 2 per cent to Rs 98.40 per share, while Oriental Bank of Commerce added nearly 3 per cent. Bank of India was up nearly 2 per cent at Rs 106.70 apiece.