PSU stocks hit hard as divestment target disappoints

PSU stocks witnessed a sharp setback today on the lower than expected target of collections for the next year.

Among the prominent public sector undertaking (PSU) stocks that fell were Bharat Electronics (locked at the 10% lower limit of Rs 167.55) and MTNL (down 7.6% to Rs 149).

In other PSUs, RCF (down 17% to Rs 10.10), Bharat Earth Movers (down 17% to Rs 45.90), Neyveli Lignite (down 15% to Rs 19.70), Dredging Corporation (down 14% to Rs 175), Bharat Electronics (down 12.6% to Rs 131.55), Steel Authority of India (down 8.9% to Rs 5.10), Shipping Corporation of India (down 5.7% to Rs 61.50), all declined.

The sharp setback in PSU shares reversed their early gains made ahead of the announcement of the budget. They soon came under selling pressure after the finance minster set a target of Rs 12,000 crore from divestment for next year in the budget. The market had high expectations on PSU divestment especially after the government recently divested in PSUs like VSNL and IBP. PSU shares have been a firm feature of the market in the past few weeks driven by the divestment initiatives of the government.

The high expectations were belied by the targeted mop up of Rs 12,000 crore as against market expectations that the FM would set a target of atleast Rs 16,000 crore from divestment. The FM has estimated the current year (FY 2002)'s receipts from PSU divestment at Rs 5,000 crore.

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