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PSU market cap rises Rs 6,050 crore

BS Markets & Research Bureaus in Mumbai

Prime Minister Atal Bihari Vajpayee's strong support for reforms on Saturday acted as the trigger on Monday for all-round buying, lifting the market capitalisation of public sector company stocks by Rs 6,050 crore (Rs 60.50 billion) to Rs 1,23,327 crore (Rs 1,233 billion) on the Bombay Stock Exchange.

An enthusiasm for public sector stocks lifted the sentiment on the stock markets on hopes that the government's privatisation process would stay on course. The BSE sensex snapped its four-session losing streak to finish with a gain of 22.27 points at 2,952.78.

Stocks of public sector undertakings on the divestment list were big gainers, with National Fertilisers, Hindustan Organic, Bharat Earth Movers, RCF, ITI, FACT and HMT frozen at the upper 20 per cent circuit filter level.

The Business Standard index of PSU stocks climbed 5.16 per cent today. The volume in PSU stock rose more than five-fold on the BSE and the National Stock Exchange.

The combined volumes on these exchanges increased 441 per cent to 66 million shares from 12 million shares on Friday. The PSUs volume on the BSE increased 452 per cent to 21.4 million shares, while volume on the NSE jumped 435 per cent cent to 44.58 million.

BPCL and HPCL rallied after a relentless fall since September 9. HPCLs market cap was up 14.4 per cent (Rs 879 crore or Rs 8.79 billion) to Rs 6,983 crore (Rs 69.83 billion) while BPCLs market cap recovered 13.53 per cent (Rs 740 crore or Rs 7.4 billion) to Rs 6,206 crore (Rs 62.06 billion).

HPCL jumped 13.41 per cent to Rs 204.30 on institutional buying interest while Bharat Petroleum advanced 12.62 per cent to end at Rs 205.20 on renewed buying interest. Prices of both these stocks had tumbled by more than 30 per cent each over the last one month after the government deferred divestment in these two companies by three months.

The list of other PSU stocks which saw large gains in market cap includes ONGC (Rs 1,269 crore or Rs 12.69 billion), Neyveli Lignite (Rs 520 crore or Rs 5.2 billion), National Aluminium (Rs 461 crore or Rs 4.61 billion), SAIL (Rs 248 crore Rs 2.48 billion) and National Fertilisers (245 crore Rs 2.45 billion).

Other PSU stocks, including Dredging Corp (up 10.09 per cent to Rs 232.50), Nalco (up 8.08 per cent to Rs 95.60), Engineers India (up 5.34per cent to Rs 314.60) and Container Corp (up 5.85 per cent to Rs 246.95) too ended higher.

"The PMs comments have raised hopes that privatisation may still go through and the market believes there is plenty of money to be made, but the downside is limited if the process does not go through," said a fund manager with a domestic mutual fund said.

Dileep Madgavkar, at Pru-ICICI Mutual Fund, said that there was a lot of value still waiting to be unlocked in PSU stocks. "Investments at these values will definitely give a lot of returns in the medium and long term," he said.

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