Power Grid Corporation of India share price declined more than 6% while ONGC, Coal India, NTPC share price too fell more 3-5% on Wednesday. Power Grid , ONGC, Coal India, NTPC also stood amongst losers in the NIfty-50 stocks putting pressure on the entire PSU pack,
Nifty PSE index that fell more than 5% in the intraday trades was led by correction in NTPC Ltd and Power Grid Corporation stocks that have highest weightage of 14.08% and 11.38% in the Nifty PSE Index. However all the public sector undertaking (PSU) saw their share prices under severe pressure.
Other constituents of the index as Power Finance Corporation and Hindustan Aeronautics Ltd saw their stock prices also decline 6-7%, NHPC ltd with almost 8% decline stood as the largest loser in the Nifty PSE back. Others as Life Insurance Corporation Of India Ltd (LIC), Steel Authority of India Ltd (SAIL), Bharat Heavy Electricals Ltd (BHEL), REC Ltd also saw their share price decline more than 5%.
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The experts have been cautious for some time and ever since the PSE index scaled 52 week highs in early March. Notably the Nifty PSE Index is down almost 7% since closing highs seen on the 5th of March.
Other top constituents by weightage apart from Power Grid and NTPC include ONGC Ltd, Coal India, Bharat Electronics (BEL) with more than 6% weightage also are putting pressure on the PSE Index.
The Experts already had remained cautious on the valuations of PSU stocks after a sharp rise in share prices over ast few months. The rally in the PSU stock had been aided by the governments focus on capital expenditure and its initiatives. As favorable valuation also helped, the PSU stocks were under owned and with decline in the commodity price the earnings too were rebounding. Such factors as per analysts had contributed to the impressive three-year rally, which saw a CAGR return of 39% over CY21–23.
Nevertheless after sharp run up in share prices, experts had become cautious on valuations of the stocks
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Experts as Deepak Jasani, Head of Retail Research at HDFC Securities said that the PSU index has risen by about 60% since October. While mid-caps, Finance and Defense stocks started the rally, large caps later also joined the rally and other stocks in refining and utilities too started gaining.
Now the correction has set in and PSU index has corrected by around 8-9%. About 15% correction is likely to take place as per Jasani. Various investors are still sitting on large profits in PSU stocks. They may like to book profits to offset losses in other stocks or to square their positions in March, before the financial Year ends.
Whether these investors who book profits now, will return in April or not, will remain to be watched for
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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Published: 13 Mar 2024, 02:07 PM IST