PSU stocks getting mauled on bourses

Stocks of public sector undertakings (PSUs) are seeing huge value destruction in 2020, with market participants shorting these stocks in the futures and options segment, holding a view that the government may further bring down its stake in these companies.

However, the negative sentiment towards government-owned companies has become more obvious in the last one month, with quarterly performance of some of the erstwhile blue chips deteriorating further.

Oil PSUs were also trending down because of crude oil prices falling to around $56-57 a barrel.

On Monday shares of ONGC fell below Rs 100 for the first time and touched a low of 98.85 on the BSE before closing at Rs 99.95, a fall by 3.20 per cent. Another blue-chip, Coal India, fell to a new low of Rs 166.85 and finally closed 3.92 per cent down at Rs 167.85. The market cap of these two erstwhile energy giants are now just above Rs 1 lakh crore compared to May 16, 2014 when ONGC scaled its highest-ever market capitalisation of Rs 3.56 lakh crore and Coal India enjoyed market capitalisation of Rs 2.51 lakh crore in August 2011.

Another erstwhile constituent of the Sensex, BHEL, dropped 3.87 per cent to Rs 34.80 and touched a new all-time low of 34.70.

The market cap of the PSU has now shrunk to Rs 12,117.58 crore.

MTNL, also a Sensex company in its heydays, fell 8.14 per cent to Rs 9.48 and its market capitalisation stood at Rs 597.24 crore as it reported a loss of 1,065.34 crore last week.

The Nifty CPSE Index fell 2.28 per cent, indicating huge negative sentiment in the market towards central public sector undertakings.

Kishore P Ostwal, chairman and managing director, CNI Research, said, “Despite hefty dividend announced by companies like GAIL (Rs 6.40 per share) and Oil India (Rs 9 per share), stocks are being shorted by traders as they are also traded in the futures and options segment. Government should take all these stocks out of F&O segment. They are falling due to government’s policies.”

Public sector bank stocks also fell sharply with Nifty PSU Bank index down 2.96 per cent. The top losers included Bank of Baroda (-4.86 per cent), Punjab National Bank (-4.43 per cent) and Bank of India (-3.49 per cent).