The Union cabinet's nod for the new mining policy saw the street shorting mining stocks on Friday.
Bellwether mining stocks, Coal India, Sterlite Industries, Tata Steel and Jindal Steel were the worst hit, losing between 3.78 per cent and 5.15 per cent in Friday's trading session.
“Though there is pressure on profitability of mining stocks in the short term, it would be beneficial for companies if the Bill is implemented in its present form as it would also ensure speedy project clearance,” said Mr Gopal Agrawal, CIO Mirae Asset Global Investments (India).
Experts said that the policy stance was less painful than the market's expectation of 20 per cent profit before tax to be spent for welfare. They also said that the existing CSR activity done by companies could be discontinued.
“There is no clarity on set offs on existing CSR activity,” said Mr Ajay Parmar, Head-Institutional Research, Emkay Global. “If there is a set off, companies will engage in CSR activity, or else rethink.”
There is also scepticism that there could be leakages in delivery while disbursing the Central pool of money to project affected persons.