BSE PSU index hits 52-week low; SAIL, NMDC down over 5%

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Shares of state-owned companies were trading under pressure with the S&P BSE PSU Index hitting its 52-week low level on the back of over 3% decline in stocks of metal and oil marketing companies (OMCs).

The S&P BSE PSU Index lost nearly 2% to hit a 52-week low of 7,851 levels in intraday deals, as compared to 0.14% decline in the S&P BSE Sensex. 

The fall in OMC counters comes amid reports that government-controlled Indian Oil (IOCL) and Bharat Petroleum Corp Ltd (BPCL) may buy 26% stake each in GAIL India, and paying the government over Rs 20,000 crore each to become integrated energy firms. IOCL, BPCL and Hindustan Petroleum Corporation (HPCL) lost in the range of 3% to 4% on the BSE.

Within OMCs, IOCL hit 52-week low of Rs 176, down 4%, extending its nearly 7% fall in past two trading sessions, after the company's shares turned ex-bonus on Thursday. The government-owned oil major rewarded its shareholders with one bonus share for every share held.

“The fall is on due to the news reports of IOC and BPCL planning to buy a stake in GAIL. The government is using such means to generate revenue and that’s the reason why many PSUs, including the OMCs have lost ground. I don’t think this is a good time to buy these stocks. If these stocks were to correct another 10 per cent from here, one can consider making fresh investment in OMCs,” says A K Prabhakar, head of research at IDBI Capital.

Another overhang for OMC are the upcoming state elections, which analysts feel can put pressure on their margins of crude oil prices were to move north over the next few months.

“The most glaring concern for OMCs in FY19 is direction of marketing margins, given five impending state elections, of which three are in large states of Karnataka, Rajasthan and Madhya Pradesh. In our view, if crude remains sideways, which is a high probability, OMCs will not need a further meaningful revision in retail price to maintain their marketing margins at the current level of around Rs 3.5/litre,” point out Nitin Tiwari and Aakarsh Chaturvedi of Antique Stock Broking in a recent report.

Among other PSU stocks, Steel Authority of India (SAIL) and NMDC lost over 5%. Central Bank of India, Engineers India, Rural Electrification Corporation (REC), BEML, Coal India, Hindustan Copper, Rashtriya Chemicals & Fertilizer (RCF), IFCI and Syndicate Bank are some of the other PSU index stocks that lost in the range of 3% to 5%.

BEML touched a fresh 52-week low of Rs 1,037, falling 24% in past three weeks after the company on March 5 said it is not aware of government in principle approval to sell 26% stake in the company.

Sentiment in metal stocks, analysts say, has been hit by the US President’s move to impose tariffs on steel and aluminium. That apart, they feel most of these stocks had run up sharply over the past few months. Prabhakar of IDBI Capital, for instance, expects the correction to be gradual and suggests a cautious approach till there is more clarity on how the new tariff levies play out.

Gaurang Shah, head investment strategist at Geojit Financial Services remains selectively bullish on the metal space given India’s exposure to the US imports of steel and aluminium. He is betting on the domestic consumption pick-up and likes Tata Steel, Hindalco, Vedanta, JSW Steel and SAIL in the metals pack.

“Long-term domestic consumption story remains robust. I don’t think there will be too much of a negative impact of the tariff that the US will impose. I am not reading too much into the correction in the metals segment. These stocks have corrected more on sentiment rather than any change in the fundamentals,” Shah says.

 

COMPANY LATEST PREV CLOSE LOSS(%)
NMDC 118.90 125.95 -5.60
S A I L 68.85 72.80 -5.43
CENTRAL BANK 79.70 83.50 -4.55
I O C L 177.30 184.65 -3.98
B P C L 430.25 447.45 -3.84
RURAL ELEC.CORP. 123.80 128.55 -3.70
ENGINEERS INDIA 155.20 160.60 -3.36
IFCI 20.30 21.00 -3.33
H P C L 352.95 364.80 -3.25
SYNDICATE BANK 60.70 62.70 -3.19
COAL INDIA 269.85 278.70 -3.18
HIND.COPPER 69.35 71.50 -3.01
BEML LTD 1042.55 1073.45 -2.88
R C F 75.60 77.80 -2.83
POWER FIN.CORPN. 85.65 88.10 -2.78
SJVN 33.50 34.35 -2.47
MOIL 196.55 201.35 -2.38
MMTC 65.65 67.25 -2.38
ORIENTAL BANK 98.35 100.70 -2.33
BANK OF BARODA 140.40 143.75 -2.33


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