Markets

Government mulls rejig of CPSE ETF constituent list

Our Bureau New Delhi | Updated on September 11, 2018 Published on September 10, 2018

Three PSUs in which the Centre holds less than 55% stake may get replaced

The Centre is toying with the idea of replacing three public sector entities forming part of the CPSE exchange-traded fund (CPSE ETF) with new ones.

Indications are that the Finance Ministry will look to replace GAIL, Engineers India and Container Corporation in the CPSE list as the Centre’s holding in these companies has fallen below 55 per cent, sources said.

An ETF, which is generally based on a particular index and replicates the index constituents in its portfolio, can be bought and sold on the stock exchanges like shares. The CPSE fund’s underlying index is one that the NSE created specifically for this ETF when it was launched in 2014.

While the Centre’s holding in GAIL is at 53.96 per cent, it is 54.80 per cent in CONCOR and 52.02 per cent in EIL.

An inter-ministerial panel headed by Finance Minister Arun Jaitley will take a final call on the new entities that will replace these three companies, it is learnt.

It is not necessary that the replacements too will have to be just three companies. It could be more and depend on the value and weightage in the CPSE basket.

As on date, the CPSE ETF has 10 blue chip companies — ONGC, CONCOR, Coal India, REC, GAIL, PFC, EIL, Oil India, Indian Oil Corporation and Bharat Electronics — as its constituents.

GAIL India, CONCOR and EIL have weightages of 11.25 per cent, 5.08 per cent and 2.28 per cent, respectively, in the CPSE ETF.

₹11,500-cr mop-up

Till date, the Centre has sold stakes in these 10 blue chips in three tranches of CPSEs, mobilising ₹11,500 crore.

As much as ₹3,000 crore was mobilised from the first tranche in March 2014; the second tranche in January 2017 brought in ₹6,000 crore, and the third tranche of March 2017 mopped up ₹2,500 crore. It may be recalled that when the CPSE was launched, it was decided to keep the government’s holding in CPSE constituents to at least 55 per cent.

So far this fiscal, the Centre has mopped up ₹9,220 crore from disinvestments. For 2018-19, the Centre has set for itself a disinvestment target of ₹80,000 crore.

The CPSE ETF on Monday closed at ₹26.91 on the NSE, and at ₹26.86 on the BSE.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on September 10, 2018
This article is closed for comments.
Please Email the Editor