Archive for July 6th, 2009

PSU index outperforms peers on Budget expectations

Shares of public sector companies outperformed private sector firms last week, riding on expectations from the Union Budget, in spite of the broad market remaining jittery ahead of the event.Budget

The Bombay Stock Exchange’s public sector undertaking (PSU) index gave best returns among the dozen other sectoral indices during the week ended July 5, in the run-up to the Budget presentation.

Among the 13 sectoral indices, the PSU index, which includes companies like GAIL, BPCL, HPCL, IOCL and MTNL, gave 2.07 per cent returns for the week ended July 5.

The PSU index ended the week at 8,226.83 points as against 8,059.77 points on June 29.

Marketmen said that the PSU stocks had been gaining on expectations of the road map for disinvestment being unveiled in the Budget and other reforms to be initiated by the UPA government.

Finance Minister Pranab Mukherjee will table the Union Budget in Parliament on Monday.

Last week, the market was volatile and the benchmark index Sensex gave a return of nearly one per cent to end the week at 14,913.05 points.

The sectoral indices that fell into negative territory at the end of trading last week include auto (0.80 per cent), oil (0.16 per cent), power (0.19 per cent), realty (0.83 per cent), capital goods (1.54 per cent), consumer durables (0.60 per cent) and teck (0.02 per cent).

Further, the pre-Budget Economic Survey has also suggested that the government sell a minimum 10 per cent stake in all unlisted public sector enterprises and auction those that cannot be revived, thus suggesting a disinvestment target of Rs 25,000 crore per annum.

During last week, PSU companies that gave positive returns were BPCL (7.5 per cent), GAIL (India) (9 per cent), HPCL (8.97 per cent) and MTNL (6.24 per cent).

The present government, with the clear and aggressive disinvestment policy, has a lot of cushion and headroom in its fiscal policy making. With the aggressive disinvestment policy, the fiscal deficit may not be such a serious threat to the Indian economy, as generally perceived, SMC Capitals Equity Head Jagannadham Thunuguntla said.

Other indices that gave positive returns were FMCG (0.64 per cent), IT (0.66 per cent), metal (0.78 per cent), bankex (0.49 per cent) and health care (0.80 per cent).