Priyanka Tiwari
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The concentration of all listed Public Sector Undertakings (PSUs) is as low as 14.61%, which is the lowest recorded since November 2023 and represents a considerable drop from the May 2024 figure of 17.77%. As selling pressure continues, the share of all listed PSU stocks within the BSE's total market capitalization has now reached a 15-month low.
The number of firms listed on the stock exchange exceeds 80 lakh crores, but the combined market capitalization of the PSUs has dropped to approximately 57.43 lakh crores. Compared to other months, Rs 64.88 and 66.34 lakh crores were recorded in January and December respectively. On the other side of the spectrum, an astonishing drop of Rs 24 lakh crores was witnessed in one single month when July hit preserving the PSUs to an all-time low value of 57.43 L lakh crores. In February, the market cap of R was recorded to be phenomenal 81.38 lakh crores
According to a report, of all 103 publicly traded PSUs, seven have experienced a drop of over 60% from their respective 12 months high. Even more staggering than that 28 out of the 103 publicly traded listed PSUs have dropped between 50-59%. Subsequently, 34 and 32 firms have fallen anywhere from 40%-50% and 20-30% respectively.
Some experts feel that public sector unit (PSU) stock prices are weak because of poor valuations and earnings in quarter 3 of FY 25. Additionally, concerns about growth in the defense and railways sectors have further boosted these fears. Following multi-year rallies, booking profits is common, which has caused a correction. Even though there are strong PSU stocks, weak credibility in earnings and less government expenditure create volatility.
Moreover, these considerations are exacerbated by a new trend of venture towards private sector stocks such as banking, IT, and other consumption sectors, which in turn has led to increased disinterest in PSUs. Although there are some good market valued PSUs, sentiment is negative, and there is repeat of downside risks, claim experts.
The head of research and VP Risk of Abans Group, Mr. Mayank Mundhra told that the Union Budget 2025 lowered market expectations for capital expenditure growth, and thus, a negative sentiment for the markets. The railways and other sectors expected capital infusion, and received nothing, which led to further eroding investors' confidence in the provided sitting limits of Rs11.21 lakh crores, which was below sensitivity. There was optimism in the market anticipating greater government spending on public sector undertakings (PSUs) infrastructure, railways, and defense. Investors not surprisingly felt that there was a further sink in sentiment the lack of motivation spending.
The Dredging Corporation of India, Chennai Petroleum Corporation, and MMTC were some of the biggest losers, losing 65, 64, and 62 percent respectively. Other notable mentions are the shipping corporation of India, hindustan organic chemicals, and ircon international who each reduced by just a little over 60 percent.
Experts stated that the Nifty PSE Index has remained in a perpetual bearish trend and has dropped by a whopping 32 percent from its peak levels. The index is currently trading below both its short and medium term EMA which suggests further selling pressure, which can be seen on the weekly chart.
Support is currently set around 7800, and if broken, can result in further decline towards 7200 to 7000. The set levels coincide with long term EMA. As long as the negative trend continues the experts suggest a sell on rise approach around 8700 to 9000, but a strong breakout above 9500 is needed for a trend change.
Hardik Matalia, a Derivative Analyst at Choice Broking stated it is best to be selective at the moment. In the long term, strong PSU stocks such as BEL, HAL, and NTPC will have opportunities, but traders should be cautious as new positions should not be taken until there is some level of stability. The recovery potential of the sector would depend on tracking FII activity, government actions and trends in other markets.
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