Skip to main content

Disinvestment talks trigger buying in PSUs

'Several mutual funds have launched PSU Funds'.

Our Bureau

Mumbai, Jan. 15

Shares of Government-owned companies gained between 5 and 20 per cent on Friday on talks of stake sales in some of them.

The BSE PSU index gained 2 per cent. Sensex and Nifty closed in the red.

Engineers India Limited gained 20 per cent and hit the upper circuit after the Government announced a 10 per cent divestment in that company. The State owns a 90.40 per cent stake in Engineers India. The stock closed at Rs 2079.70 on the BSE.

The other such counters that gained on Friday were State Trading Corporation, Dredging Corporation of India Ltd, Hindustan Copper, NMDC, Rashtriya Chemicals and Fertilisers Ltd, MMTC, BEML. The Government's holding in these companies is more than 90 per cent.

The Cabinet approval for disinvestment in Engineers India has brought renewed buying interest in other PSU stocks such as NMDC, GMDC, FACT, RCF, ITI, HMT, HOCL, National Fertilizer Ltd etc, said Mr Alex Mathews Head, Research Centre – Geojit BNP Paribas Financial Services.

According to a Sharekhan report: "Disinvestment remains one of the trump cards for the Government in managing fiscal deficit. However, the ambiguity over the pace of disinvestment and the absence of any visible progress in disinvestment has led to uncertainty over willingness of the Government to play the disinvestment card. Having said that, the recent announcement (all profitable listed PSUs to have minimum 10 per cent public ownership) gives the much needed traction to the disinvestment programme."

Year 2010 can expect huge issuances from the Government . As India is moving from a $1 trillion economy to a $2 trillion one, it has appetite to absorb these massive investments mainly due to the 38 per cent savings rate, a report by Arm Research Private Ltd said.

PSU divestment has created value for investors in the long run. Taking this into consideration, several mutual funds have launched PSU Funds which would tend to benefit from the PSU divestments, the report said.

Popular posts from this blog

Bio-fuel has top investors powered up

23RD ,JUNE India's fortune-hunters believe their new-found love for biofuel will pay off. India's well-known investors who are known for their Midas touch have spotted an opportunity in bio-fuel, betting big on ethanol, bio-mass and even bio-fuel equipment makers in India and other parts of the globe. Billionaires Rakesh Jhunjhunwala, C Sivasankaran, Vinod Khosla, founder of Sun Microsystems, and Nemish Shah, the media-shy joint partner of Enam Financial Services, are investing in bio-fuel makers quietly, expecting that bio-fuel will have a big play in the coming years as the world looks for a viable alternative to the fast depleting oil reserves. Jhunjhunwala, who is known for his ability to spot a multi-bagger at a very early stage, recently invested in Hyderabad-based bio-fuel firm Nandan Biometrics.He is also a 10 per cent stakeholder in Praj Industries, which is a bio-fuel technology provider…

up to 8,500% return in 5 years! Investors made a killing in these 30 smallcap stocks

U By Rahul Oberoi, | Updated: Dec 01, 2017, 04.06 PM IST Post a Comment
Efficiency pays in the long run. Among the top smallcap plays on Dalal Street, 30 companies with stable return on equity (RoE) and return on capital employed (RoCE) have surged up to 8,500 per cent over the past five years.

All these companies had a debt-to-equity ratio of less than 1 and have been maintaining RoE and RoCE of over 20 per cent since 2012-13.

Avanti Feeds emerged the chart topper, with an 8,527 per cent gain to Rs 2,596.60 as of November 28 from Rs 30.10 ..

ovember 28 from Rs 30.10 on November 27, 2012. The company’s return on equity for FY17, FY16, FY15, FY14 and FY13 stood at 42.65 per cent, 46.21 per cent, 52.41 per cent, 45.79 per cent and 27.60 per cent, respectively. Avanti also managed to achieve a return on capital employed of over 50 per cent in last four years. Its RoCE stood at 28.59 per cent inRoE measures net income earned for every rupee of shareholder funds, while…

5 dark-horse picks

Kwadrat/ Kwadrat/
If you are a conservative investor, using the mutual fund route is the best way to invest in stocks. But if you are game for some excitement, you might want to dabble directly in stocks, especially small-cap stocks. Stocks that are smaller in size, in terms of market capitalisation, carry higher risk. The reasons are — one, lower traded volume increases price volatility, two, information is usually scarce on these companies, three, business risk is higher since many of these companies are dependent on a single product and four, governance risk is also higher in these stocks. That said, small-cap stocks have the capacity to deliver far greater returns when compared to large-cap stocks. Sample this: there were 16 stocks with market cap more than ₹50,000 crore in January 2009. These stocks delivered an average return of 138 per cent in the last eight years but 4 out of every 10 stocks in this group delivered negative returns. On the ot…