PSUs lead mid and smallcap stocks' sell-off on Dalal Street
The Nifty Small-cap 250 dropped 1.3% and the Nifty Mid-cap 100 declined 0.9%, while the Nifty Public Sector Enterprises (PSEs) index slipped 2.7%. All three indices erased a portion of the losses earlier in the trading session tracking the rebound in the benchmark indices — Sensex and Nifty, which ended 0.3% higher.
Nifty Small-cap 250 fell as much as 2.75%, Nifty Mid-cap 100 sank as much as 2.6% and the Nifty PSE slumped as much as 5.1% earlier on Friday.
Analysts said a correction was imminent in the PSU stocks after the sharp rally in the past couple of months.
«Most PSU stocks are at expensive valuations and have run up significantly in the past one year,» said Sandeep Raina, executive vice president-research, Nuvama Professional Clients Group. «A correction of 10-15% post a sharp rally is normal and the long-term outlook remains positive.»
Out of the 3,932 stocks traded on the BSE, 2,573 stocks declined, while 1,270 advanced.
Shares of Power Finance Corporation slumped 8.45%, while REC and NHPC fell over 5%. Shipping Corporation of India slumped 6.72% and Rail Vikas Nigam declined 7.99% on Friday.
«PSU stocks have witnessed a very sharp rally in the past couple of months,» said Sneha Poddar, associate vice president- equity research, Motilal Oswal Financial Services. «The re-rating in these stocks has already taken place which has led to profit booking.»
Poddar said elevated oil prices due to the Red Sea crisis and the hawkish stance of the US Fed and the RBI have also contributed to profit booking in
