Shares of public sector enterprises and Public Sector Units (PSU) banks rallied close to 8 per cent today on June 3, 2024, as benchmark indices touched record highs on the back of exit polls. As the Sensex and Nifty rallied over 2,500 points and 700 points respectively, central public sector enterprises, state public sector units and bank stocks were the most to gain.
S&P BSE CPSE which measures the performance of Central Public Sector Enterprises (CPSEs) listed at BSE rallied 288 points (7 per cent) to touch 4,391 points.
Also the Nifty public sector enterprises (PSE) index, which encompasses both central government and state government-owned companies, made around 8 per cent gains, with all of its constituents in the green. The Nifty PSU Bank Index was up 8.40 per cent climbing to a record high, with Bank of Baroda stock rising 12.04 per cent at the closing bell.
As experts predict that Nifty will surpass the 24,000 mark in the coming days, let us take a look at how PSU stocks may gain in a probable bull run.
Says Shruti Jain, CSO, Arihant Capital, " There's been a significant rally in PSU stocks following the recent exit polls. This surge is particularly evident across the board, especially in banking stocks."
"The exit polls projecting 350 to 400 seats in the Lok Sabha, exceeding initial expectations of 250 to 300, has fueled positive sentiment towards PSUs, particularly banks. The expectation is that reforms will continue under this government, benefiting the PSU basket as a whole. Leading names like SBI, Canara Bank, Indian Bank, and PNB, along with other PSU banks, have all witnessed a rise," Jain said.
"This optimism stems from a remarkable turnaround in PSBs. Just three years ago, accumulated losses were close to Rs 1 lakh crore. However, last year, all PSBs collectively reported a profit after tax (PAT) of nearly Rs 1.4 lakh crore. This signifies a significant increase in profitability across PSU banks in recent years."
Central Bank of India, State Bank of India, Canara Bank and Indian Overseas Bank went up 11.48 per cent, 9.48 per cent, 9 per cent and 6.24 per cent respectively after many of them hit their 52-week high. Many defence PSUs like HAL and BEL made gains and scrips Cochin Shipyard Limited (CSL) hit an all-time high of Rs 2,100 today. Many of these stocks have given huge returns to investors in the last year, for instance, Cochin Shipyard stocks have surged over 700 per cent.
Stock Broking and wealth management company Anand Rathi has included PSU stocks in sectors to bet on after the National Democratic Alliance comes to power. Coal India, NHPC, and BEL were among its stock picks. Coal India rallied 4.34 per cent per cent, NHPC rose 5.59 per cent, and Bharat Electronics Ltd (BEL) 8.06 per cent and hit its 52-week high today. NISM-certified Research Analyst Hariprasad Menon also suggested investors focus on specific sectors like PSU, infrastructure, Renewable energy, PSU bank and Finance. "The market is already at a high, so if it misses any positive surprises such as NDA not meeting its 350 tally, it may dip tomorrow. However, If NDA wins Andhra Pradesh and Odisha State Assembly elections and shows considerable presence in some southern states, a heavy bull run may follow in coming weeks," Hariprasad said.
