Rs 7 lakh crore profit in 10 days! Why PSU stocks are rallying like Modi managed '400 paar'
PSU stocks on June 4 when BJP failed to get the absolute majority in the Lok Sabha on its own are now forced to eat the humble pie. After crashing 16% on result day, PSU stocks are once again leading the bull run as if PM Modi actually managed to achieve the ambitious target of '400 paar'.
Driven by defence PSU Mazagon Dock Shipbuilders, which has seen a 48% return, the combined market capitalisation of 56 PSU stocks, which are part of the BSE PSU index, has surged by Rs 723,823 crore to Rs 68,03,059 crore in just 10 trading sessions (from June 4 closing till 19 June).
Shares of RCF have zoomed 33%, Cochin Shipyard 24.5% while HUDCO and MMTC are up 23% each. Other top gainers include HAL, BEL, and BHEL.
The fate of the multibagger bull run in PSU stocks was linked to the BJP's performance in the Lok Sabha elections and was also segmented as "Modi stocks" along with other capex-linked stocks by CLSA. Investors are optimistic because not only does the current NDA government look stable, but it has also given signals of policy continuity, especially when it comes to infrastructure and domestic manufacturing.
Also read | PM Modi prediction comes true! Sensex up over 5,000 points in ballot-proof rally
The government’s infrastructure and capex push, which had gained momentum post-pandemic, along with cleaner balance sheets, improved governance, margin tailwinds for commodities, and burgeoning order books, will continue to drive PSU outperformance and their rerating, according to analysts.
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