In the past one year, PSU stocks have jumped 100%. And over the last decade, they have gone through a complete cycle of valuation. So, will PSU stocks do well from here onwards? The price-to-book value of PSE Index is back to 2014 levels where chances are that ROEs, which are currently at their peak, may fall.
In the past three months, the Nifty PSE index surged close to 48%, while the Small-cap 250 and Mid-cap 100 indices rose about 21%. Analysts said the rally in public sector stocks has led to a surge in participation by individual traders, who have mounted bullish bets on them with borrowed money.
The benchmark Nifty 50 ended 0.4% down at 21771.70 points, and the Sensex closed 0.5% lower at 71731.42 points. On the other hand, the Nifty PSE index closed 2% higher at 9189.20 points.
Public sector stocks have emerged as notable outliers, garnering favor from investors in the last 1 year. The Nifty PSE index has soared 81 percent in this period as against a 21 percent rise in benchmark Nifty.
The companies that saw profits grow faster than sales were REC, Power Finance Corporation, Coal India, NTPC, Bharat Electronics, IRCTC, Container Corporation of India, Gail India, and Oil and Natural Gas Corporation.