MUMBAI: Stocks of government-owned banks and entities have taken a severe hit as the election result trends by the afternoon shows BJP-led NDA may not get the landslide mandate as expected.
The Nifty Bank, Nifty CPSE and Nifty PSE indices – which track government-owned banks and companies – have collapsed by over 17% each around 12:30 in the afternoon.
Nifty Bank index has fallen by 17.78% or 1,423 points around 12:30. Nifty PSE index has fallen by 19.45% or 2,200 points, while Nifty CPSE has shed 18.5% or 1,304 points till 12:30.
Among the biggest losers in the PSU pack were REC Ltd, Bhel, BEL and SAIL – all down 25%. Concor, HAL and PFC were down over 25%. Mazagon DocK, Titagarh Rail System, Indian Bank and PNB fell by around 20%.
On Monday, Public sector stocks saw sharp jump in anticipation of return of BJP with a bigger mandate after the exits polls indicated so.
Among the PSU stocks, the Nifty PSU bank index surged 8.40% to close at 8,006 points with all its 12 constituents clocking gain on Monday. Bank of Baroda rallied 12.08% while the State Bank of India settled 9.48% higher. SBI also became the first public sector bank to have a market cap of Rs 8 lakh crore.
Also, Nifty CPSE indices jumped 471.90 points or 7.16% to end at 7,059.80 points, with NTPC climbing 9.33%, Power Grid gaining 9.03% and Bharat Electronics Ltd (BEL) surging 8.06%. Market experts said that as these stocks are heavily influenced by the government's economic agenda, a continuity in policies with increased focus on capital expenditure is a big positive for them.
The public sector companies have performed well under the 10-years of Modi government. The privatisation of CPSEs and PSU banks also got a push under the Modi government with the successful privatisation of Air India and Neelanchal Ispat Nigam, both of which were sold to Tatas.