Has the rally in PSU stocks run its course for now? Experts say valuations nearing peak

Nilesh Shah of Kotak Mahindra AMC is in the "conservative camp" when it comes to assessing PSUs. "I think a lot of them have had a miraculous run and while there are reasons for that run, I think now valuation-wise things are reaching near its peak," he told CNBC-TV18 on September 11. He expects some consolidation within the space and added that it is possible that there may be a sector rotation from PSUs into a non-PSU sector.

"I think it's a painful subject, because most of us are hardly invested in that segment, and every day, you see the prices moving up," Sunil Singhania of Abbakus Asset Management said.

He also said that the surge has been sharper in these names as some of those have a low float. "I would, again highlight that a good combination to play both PSUs as well as the banking segment, is to the PSU banks. Our view is that it is now better if you want to be in the PSU segment to play it through the PSU financials and banks," Singhania added.

Amit Jeswani of Stallion Asset Management said that the PSU rally is a late-stage one.

"I would look at opportunities on pullbacks, I don't want to rush in and jump on something that has moved 20-30 percent because PSUs are behaving like midcaps as of now. But as and when they do pullback and consolidate, which they do very often in their longer-term path - that is when you want to get in again for the next move because it might not be over long term," Rohit Srivastava of Indiacharts.com said.