Retail investors driving PSU stocks rally
India PSUs have been on a roll, with BSE PSU Index up 21% YTD and +279% since Oct 2020 when it started outperforming broader market after almost a decade of underperformance
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New Delhi: There has been no meaningful Institutional crowding in PSU names in this cycle, barring few names. PSU rally seems to have been driven by retail investors, foreign brokerage, Bernstein said in a report.
Foreign Institutional Investors (FIIs) have always preferred private companies (20.5 per cent now vs. 10 year average of 21.5 per cent) over PSUs (9.3 per cent now vs. 10 year average of 9.8 per cent) and there hasn’t been any shift in this preference in current cycle.
Domestic Institutional investors tend to own more PSUs compared to FIIs, however, they have been reducing their ownership in PSU names (13.7 per cent now vs. 10 year average of 14.6 per cent) and increasing in non-PSU (15.7 per cent now vs. 10 year average of 12.8 per cent) over the last year, the report said.
FII crowding can be seen in NMDC, Bharat Electronics, HAL, BOB, Canara Bank, Indian Bank and Union Bank. DII crowding is in Gujarat Gas, National Aluminium Co., Container Corp, Indian Bank, Bank of India and HUDCO.
India PSUs (Public Sector Undertakings) have been on a roll, with BSE PSU Index up 21 per cent YTD and +279 per cent since October 2020 when it started outperforming the broader market after almost a decade of underperformance, the report said.
