Investors with risk on their mind bail out of favourites
Shares of defence firms, Public Sector Undertakings (PSUs) and firms deriving business from Railways-the darlings on Dalal Street in the recent run-up- tumbled on Tuesday as investors dumped them with risk aversion gripping the stock market. Analysts said concerns that many of these stocks were overbought following recent gains weighed on investor sentiment.
Among defence stocks Bharat Electronics, Hindustan Aeronautics, Bharat Dynamics, and Garden Reach Shipbuilders & Engineers declined 3 -9%.
In the Railways sector, RailTel Corporation of India, Rites and Rail Vikas Nigam dropped 9-11%. Among PSUs, BEML, Cochin Shipyard, BHEL, NBCC and Shipping Sector of India (SCI) fell 9-12% with the BSE PSU declining 3.75%.
The Nifty ended almost flat, while the Sensex ended marginally higher.
«The stocks in sectors such as defence and railways have already run up quite a lot in a short while and are ahead of their fair value,» said Chintan Kotak, Senior Director, IIFL Securities. «So, the fall in these stocks by around 5%-10% is the correction to bring these close to their fair value.»
Kotak said he expects PSUs- especially banks — to rebound faster once the recent correction ends.
«PSU stocks on the other hand, have been behind the curve according to the market, so there is an expectation of a rally in these stocks, especially SBI, Bank of Baroda and PNB among others.»
PSUs, defence and companies handling Railways projects have been the best stock performers with several of them more than doubling in the past six months.
