NEW DELHI: Shares of many ‘multi-bagger’ state-owned companies took a big beating on Monday as muted third-quarter earnings numbers and lack of fresh triggers are said that jittered investors’ sentiments and raised valuation concerns.
The BSE PSU index, the key barometer of PSU (public sector undertaking) stock, fell 4.44% on Monday to close at 17,564 points. The selloff was so widespread that of the 56 constituents of the index, 55 ended the session in red. Only Power Grid Corp managed to close with a little gain of 0.02%.
The fall in PSU stocks came as overall market sentiment was weak. The benchmarks- BSE Sensex and NSE Nifty50 fell about 0.75% each on Monday. The midcap and the smallcap indexes underperformed and fell about 3% each.
In the PSU universe, stocks from all sectors, from banks to energy and railways to defence, were under selling pressure on Monday. The Nifty PSU Bank index plummeted by 4.43% to 6,637 points. All the 12 constituents of this index closed in the red, with four stocks falling between 10 and 12%. These stocks were Bank of Maharashtra, Central Bank of India, Punjab & Sind Bank and Indian Overseas Bank.
PSU banking stocks are under pressure after the RBI’s latest monetary policy meeting, in which the central bank kept the repo rate at 6.5%. Railway PSU stocks, a favourite among investors in the recent bull run, have also been witnessing selling pressure since the last few sessions and on Monday shares of Indian Railway Finance Corp, Rail Vikas Nigam, RailTel Corporation of India and Ircon International crashed more than 10% each.
Selling in the railway stocks is attributed to no big announcement for the sector in the Interim Budget. Shares of defence heavyweight Hindustan Aeronautics Ltd (HAL) fell over 4% on Monday after the Co reported a 9% rise in third-quarter profit to at Rs 1,261 crore. Energy stocks such as Indian Oil, Bharat Petroleum and Coal India also fell sharply on Monday.
Sonam Srivastava, founder and fund manager at Wright Research, said the prospects for PSU banking counters seem cautiously optimistic, with factors like lower interest rates and potential government support boosting confidence.