PFC and REC back in red

Power Finance Corporation (PFC) and REC Ltd, both have behaved exactly the same way – they rose in the morning and are now trading in the red. PFC, which had closed yesterday at Rs.89.60, opened higher at Rs.90.60 and even went up further to Rs.92.65 at which level, profit booking came and the stock is now in the red at Rs.88 levels.

Ditto price trend in REC too – from its close of Rs.100.50, it opened at Rs.101.40 and rose to Rs.104.70 and is now in the red at Rs.99 levels.

These two stocks were up initially reacting to the FMs sops given yesterday. A Rs.90,000 crore liquidity infusion for power distribution companies (discoms) where revenues have dropped – PFC and REC to provide this liquidity through loans against state guarantee for exclusive purpose of clearing of discoms’ liabilities to the power generators. Central Public Sector Generation companies to give rebate to discoms which will be passed on to the customers.  This is a one-time liquidity infusion.

Discoms currently owe around Rs.94,000 crore to power producer and transmission companies.