MUMBAI: PSU stocks are on a roll. Market expectations that the UPA government, without the baggage of its Left allies, would push forward with the divestment of PSU companies, is driving these stocks.

As a result, since May 16 the investor euphoria for stocks of government-run companies, the PSU index on the BSE has gained 40%, double the sensex gain of 20% during the same period. While the sensex is near its nine-month-high level, the PSU Index touched a 52-week high on Friday. Among the PSU stocks, NMDC, MMTC and Neyveli Lignite were the top gainers (see table).

Additionally, there are four PSU stocks in the elite sensex 30 scrips: BHEL, NTPC, ONGC and SBI. And all the four hit new 52-week highs after the poll results were announced two weeks ago. Also among the 47 stocks that constitute the PSU index, nearly two in every three hit new 52-week highs since May 16, the day the Lok Sabha results were announced. All these gains have come despite some of the PSU companies registering ordinary results, market players said.
Part of the rise could also be attributed to the new government’s indications that it could move to free petro-product prices from the currently regulated set up, brokers and dealers said. Such expectations have also attracted investor interest in oil refining and marketing companies like Indian Oil, BPCL and HPCL, they said.

The frenzied buying in these counters have also made the government richer by a substantial margin, and in matter of weeks. The combined market cap of 50 PSU stocks have gone up by Rs 4.4 lakh crore in 10 post-results trading sessions: An average gain of about Rs 44,000 crore on each trading day. As of May 29, among the top 10 most valued companies in India, six were being run by the government. However, this composition has not changed from what was before the poll results were announced.

source: Economictimes

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