PSUs more or less unscathed by market meltdown

The state-owned entities have only lost Rs 19,350 crore against Rs 8.1 lakh crore by all listed companies

GN Bureau | November 23, 2016


#PSU   #meltdown   #state-owned  

Public sector units (PSUs) have suffered less compared to others amid the current market meltdown, limiting notional loss in market value for exchequer, reported Business Standard.

The average decline in the PSU pack has been only 1.6% even as benchmark indices fell over seven per cent since November 8, the day when the Rs 500 and Rs 1,000 currency notes were scrapped.

In terms of market value, the state-owned entities have only lost Rs 19,350 crore against Rs 8.1 lakh crore by all listed companies.

This outperformance of PSUs was largely on account of strong performance by public sector banks (PSBs), which have largely registered gains since the move to ban certain notes, the media report said.

 “The Indian banking sector, especially PSBs, is reeling under bad debts and needs recapitalisation. Diverting funds from note-ban windfall to PSBs’ recapitalisation can improve the health of PSBs and have positive spillovers for the rest of the economy. Further, progress towards a cashless economy will provide a boost for savings in financial assets, which is structurally positive for intermediaries like banks,” Ravi Muthukrishnan, co-head of research at ICICI Securities, was quoted as saying.
 

Oil and power PSUs such as ONGC, Oil India and Petronet LNG have done well during the period.

The media report said that this outperformance of public-sector stocks has also provided some relief to the government, which has lined up several divestment issues in the next four months to meet its ambitious disinvestment target of Rs 56,500 crore for 2016-17. Of this, the government has so far garnered Rs 21,400 crore, data from Department of Investment and Public Asset Management showed.

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