Mumbai, Sept. 8: Is the investors’ honeymoon with PSU stocks over' This is the big question that the bourses will answer tomorrow. The markets will open on Monday for the first time after the government put off for three months the decision on the privatisation of the two oil refinery and retailing majors—BPCL and HPCL.
PSU stocks which were outstanding performers so far, are likely to shed their gains as the markets begin discounting the government’s dithering over privatisation. Brokers say the uncertainty in the markets “is killing”. Several funds and high net worth investors were overweight on these stocks, having hoped for the privatisation of the oil companies.
“Investing in this sector now will be like catching a falling knife,” a leading stock broker said.
With their hopes having come to naught, it will be a south ward journey for most of these stocks. The government’s decision to move ahead with the selloff of aluminium major Nalco and other PSUs will also be taken with a pinch of salt as the anti-disinvestment lobby in the Cabinet has tasted blood.
“This (privatisation) was one of the triggers for the markets,” an analyst said. “Tomorrow will see most of these public sector stocks move southwards,” he added.
“There is a dearth of stories in the markets. And privatisation was one good story that has gone awry,” rues a dealer affiliated to Geojit Securities, a prominent NSE brokerage.
The markets could see money flowing out of PSU stocks, especially from the shares of the oil companies to other segments. “The tech sector could get a look again,” says a dealer affiliated to an institutional brokerage.
Foreign institutional investors have been selling for three consecutive days. They have adopting a wait and watch policy for awhile, and inflows could slow to a trickle warn analysts tracking the marketplace. FII investment during this month has been in the negative.
There are eternal optimists too, in the market who say that it is more likely that like last year, the government will start taking a view around December or January, when the fiscal deadline starts mounting.
The BSE sensex ended the week at 3141.11, down 1.27 per cent.