Most PSU stocks are running out of steam. These are the exceptions.

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Cochin Shipyard andBharat Dynamics. But while most PSU stocks are running out of steam, some big names are bucking the trend. These includeCoal India, NTPC, Hindustan Petroleum Corporation, Oil and Natural Gas Corporation and a few others in the power and oil & gas sector.

Their stocks have fallen around 1-7% from their 52-week highs, while the index is down 5% from its 52-week high. Also read | Earnings vs expectations: Have PSU stocks become uninvestable? “These are all old-economy stocks, which typically do well when the overall economy starts doing well," Charanjit Singh, fund manager at DSP Mutual Fund told Mint. “There was a major push from the government to improve their performance, which boosted their valuations." When investors realised that PSU stocks were undervalued, a major re-rating ensued, sparking a bull run in the sector.

But optimism turned into exuberance, and the stock prices of these companies raced ahead of their fundamentals, barring a few. India's peak power demand was 250 GW as of May 2024, breaking the previous record of 243 GW set in September 2023. The government now expects peak power demand to hit 400 GW by 2031-32, which is higher than the previous projection of 384 GW.

This rapid increase is due to rising per-capita consumption, which has grown at an average rate of almost 7% over the past five years. “Demand for power is accelerating, which bodes well for the power sector. Power will be in the game for the next 8-10 years," Singh told Mint.