Public sector undertaking (PSU) stocks bore the brunt of broader sell-off on Wednesday, March 13, with the Nifty PSE index plunging as much as 6.7% —marking its biggest single-day fall since March 2020. What’s more! The broader sell-off also saw the PSU basket losing nearly ₹6.5 lakh crore of investor wealth. That compares with 13.5 lakh crore erosion seen by all listed companies on the BSE.
In fact, the PSE index has been falling for the last five sessions, with a cumulative loss of close to 10%. During the same period, the aggregate market capitalisation of PSU stocks has come off by a whopping ₹10.3 lakh crore. To be sure, the index had gained close to 70% in about four months through March 5, to hit a record high of 9666.55 points.
In absolute terms, insurance behemoth Life Insurance Corporation lost the most. While the insurer witnessed a market cap erosion of ₹48,386 crore, NTPC lost close to ₹22000 crore in Wednesday’s trade. Other PSUs like Bharat Electronics, Power Finance Corporation, State Bank of India, IOCL, Hindustan Aeronautics, IRFC, ONGC, Power Grid Corporation and Coal India also witnessed market cap erosion anywhere between ₹10,000 crore to ₹20,000 crore.
| PSUs which lost the most in Wednesday's trade | |
| Fall in Mcap (Rs Crore) | |
| LIC of India | -48,386 |
| NTPC | -21,575 |
| Coal India | -19,875 |
| Power Grid Corp. | -19,392 |
| ONGC | -18,933 |
| IRFC | -16,336 |
| Hindustan Aeronautics | -15,251 |
| IOCL | -13,486 |
| SBI | -11,111 |
| PFC | -10,379 |
| Bharat Electronics | -10,197 |
While shares of RailTel Corporation tested their lower circuit of 20% on Wednesday, the stock of Rites plummeted 16%. Additionally, all listed PSUs ended the day in red with as many as 20 PSUs plunging at least 10% each.
The availability of lower number of shares for trade made the fall in PSU stocks much deeper. For instance, the government held 96.5% in LIC of India as of December 2023. Similarly, 86.4% of IRFC and 88.6% of MRPL are held by the promoter. The government's holding in Mazagon Dock Shipbuilders stood at 84.8% as of December end.
Market participants expect similar corrections to persist, considering the considerable excess that has been built into certain segments of small caps. Nilesh Shah of Kotak Mahindra AMC is of the opinion that the fall may be extended in stocks where promoter holdings is high. “The correction to persist for a bit longer in stocks with low free float,” said Shah.
(Edited by : Anand Singha)
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