The Telegraph
Since 1st March, 1999
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Selloff dream sours, not fetish for PSU shares

Mumbai, Jan. 5: The tardy pace of disinvestment and the controversy surrounding several selloffs failed to dampen interest in PSU stocks, which accounted for two-thirds of Dalal Street’s turnover in the previous year.

The story in numbers: market capitalisation of all stocks listed on the Bombay Stock Exchange (BSE) went up to Rs 6,28,197 crore on December 31 last year from Rs 5,30,950 crore on January 1 — up a staggering Rs 97,247 crore.

Despite the controversy over the disinvestment of Nalco, HPCL and BPCL that brought fissures in the Union Cabinet out in the open, the market cap of BSE’s PSU index—a compendium of leading public sector companies—rose Rs 59,997 crore to Rs 1,54,187 crore on December 31, from Rs 94,190 crore at the beginning of the year. Notwithstanding the several ‘false alarms,’ mere announcement of a meeting of the Cabinet Committee on Disinvestment (CCD) still has the markets abuzz with activity on hopes of some results.

“Disinvestment will be the recurring theme this year,” said Arun Kejriwal of Kejriwal Research and Investment Services.

Another performer on the bourses was the banking sector that reaped the benefits of the Securitisation Bill along with gains accruing from treasury operations, combined with the sharp fall in borrowing costs.

The market cap of banks appreciated by over 80 per cent to around Rs 50,000 crore. So did fertiliser companies, discounted by the market on expectations of some big-ticket selloffs following changes in the fertiliser policy. The market cap of this sector more than doubled to over Rs 7,500 crore.

Auto-ancillaries also gained, thanks to competitive exports and the good performance recorded by the domestic auto industry—its original equipment manufacturers (OEM).

Reliance and Hindustan Lever were surprise losers, but managed to regain part of the lost ground by the fag end of the year. Nevertheless, Reliance shed 10 per cent of its market cap to Rs 44,000 crore, while Hindustan Lever shed over 15 per cent to around Rs 40,000 crore.

The surprise winner in year 2002 was the Tata group that gained 18 per cent due to Tata Steel, Tata Engineering and the big ticket acquisitions of VSNL and CMC. Others that posted marginal gains in 2002 were the Mahindra & Mahindra group, the Aditya Birla group and the Kalyani group.

FIIs turn away

Net investments of foreign institutional investors (FIIs) in the Indian equity and debt markets fell 72.33 per cent at Rs 3,677.7 crore ($ 763.5 million) in 2002 compared with Rs 13,292.7 crore ($ 2,843.30 m) in the previous year, adds PTI.

The FIIs netted purchases of Rs 3,609.7 crore ($ 746.7 m) in equities, while netting inflows to the tune of Rs 196.1 crore ($ 35.8 m) in debt markets, according to Sebi data .

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