While the Sensex gave moderate returns in February, as many as 74 stocks on the BSE 500 clocked double-digit gains of up to 32%.
In the last month, benchmark Sensex net gained just 1%, amid volatility and selling pressure, particularly towards the end of the month.
Meanwhile, as many as 246 stocks on the BSE 500 index scaled fresh 52-week highs during the last month.
Of the 74 stocks that gave double-digit returns, 14 belonged to the public sector space. These were Hindustan Petroleum Corporation, CONCOR, Bharat Electronics, HUDCO, Shipping Corporation of India, Indian Oil Corporation, SBI, Canara Bank, BPCL, UCO Bank, Punjab & Sind Bank, Oil India, Mangalore Refinery & Petrochemicals, and Indian Overseas Bank, which gained 10-32%.
“There is a positive sentiment for PSU stocks now. Some PSU segments are doing very well like banks where the turnaround is sharp. Even after the run-up in prices, PSU banks are fairly valued,” says V K Vijayakumar, chief investment strategist at Geojit Financial Services.
However, Vijayakumar acknowledged that some of the PSU stocks are trading at high valuations and cautioned that if the markets correct significantly, there can be steep corrections in highly valued PSU stocks.
Anish Tawakley of ICICI Prudential AMC has already turned cautious on the PSU space and his fund house has been gradually trimming its holdings.
“Over the past three years, PSUs have moved from being one of the cheapest segments in the market to a situation where some of the PSUs are today overvalued. This has been largely possible owing to the good work done by the PSU managements coupled with the way the government has ensured that these companies worked in the interest of the shareholders,” Tawakley said.
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Other major double-digit gainers were Indiabulls Real Estate, Intellect Design Arena, CRISIL, Trent, Tata Investment Corporation, Wockhardt, and Triveni Turbine on the BSE 500.
While 74 stocks managed to outperform, there were quite a few laggards in the index, with 70 of them registering double-digit fall of up to 47%. One 97 Communications was the worst hit.
One 97 Communications stock was hit significantly by the Reserve Bank of India’s diktat, barring Paytm Payments Bank from onboarding new customers and offering incremental banking services from March, due to concerns regarding breach of and compliance with regulatory norms.
The sell-off in many other BSE 500 stocks, that belong to the smallcap segment, was after market regulator SEBI raised concerns over the rapid rise in stock prices and the unprecedented inflows in the midcap and smallcap funds.
“The SEBI directive comes after the initial round of stress tests on smallcap and midcap schemes with large assets under management (AUM) to see if they can manage huge redemptions in the event of a market downturn,” said Chirag Mehta, CIO of Quantum AMC.
However, the fund house believes that while the overall valuations in the smallcap space look high, there are pockets of opportunities which appear reasonable on PEG (Price to Earnings Growth) basis.
(Data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
