The Hindu Business Line : Divestment hurdles fail to stop PSU stocks

THE state-owned companies stocks are among the top picks of the market players despite hurdles in disinvestment. The rising interest in the PSU stocks is evident from the BSE PSU Index touching an all-time high on Monday.

On Friday, the 44-share BSE PSU Index touched an all-time high of 3,050 before closing at 3,045. In the last one year (September 2002 onwards), the BSE PSU Index has provided a return of 91 per cent and since the beginning of this year; the returns are again 91 per cent. In comparison, the BSE Capital goods index had returns of 76 per cent in the last one year and 78.5 per cent since January.

Of the 44 shares in the PSU Index, 11 touched their all-time high last week — including ONGC, Nalco, SBI, Canara Bank, Oriental Bank of Commerce, Bharat Electronics, Bongaigaon Refinery and Chennai Petro. The fancy of the market towards PSU stocks began at a time when several companies were lined up for disinvestment.

But, interestingly, the Government has not been able to sell its stake even in a single listed PSU after February-March 2002. The only major Government sell-off was Maruti, but the company was not listed before the disinvestment. The current interest in PSU stocks appears to be based on their fundamental strength, say stock traders. According to Mr Arun Kejriwal of KRIS Research,"The interest in PSU stocks is due to the good financial performance of the companies in the last one yearAnother factor that has contributed to the growing interest in the PSU stocks is the increased transparency in terms of disclosures

Mr Ambarish Baliga, Vice-President, Karvy Stock Broking said, "the interest in the PSU stocks has been mainly in sectors such as banking and oil. Both the sectors have the fancy of the market and the weightage of these sector in the PSU Index is also very high."

Article E-Mail :: Comment :: Syndication

Stories in this Section
Divestment hurdles fail to stop PSU stocks

Chennai alone toes CAS line — Mumbai, Kolkata miss deadline

Dumping of a different kind

S&P upgrades banking outlook to `stable'

Move to boost pension reforms — PPF likely to be phased out

Sensex crosses 4,300 mark

ICICI Venture buys out Tatas in Tata Infomedia