New Delhi: Shares of government companies have shown tremendous growth, earning a profit of Rs 7 lakh crore in the last 10 days. This boom is being compared to the decisive management style of Prime Minister Narendra Modi. Analysts and investors are closely looking at the reasons behind this unprecedented rise. According to a report by the Economic Times, several factors have contributed to the impressive performance of PSU stocks. An important reason is the government’s focus on privatization and strategic disinvestment of state-owned enterprises. The recent announcement by Finance Minister Nirmala Sitharaman about the government’s plans to privatize several PSUs has created a positive perception among investors.
Clear roadmap of privatization aroused confidence
An industry expert said that the clear roadmap of privatization of the Modi government has aroused confidence among investors. The market is reacting positively to the possibility of more efficient and profitable management of these enterprises. Apart from this, the strong financial performance of many PSUs has played an important role in increasing investor confidence. Companies like State Bank of India (SBI), Bharat Petroleum Corporation Limited (BPCL) and Coal India have reported strong quarterly results. This has led to a rise in their share prices.
A market expert said that PSUs are showing strong financial health. Their profitability is attracting investors. The market is recognizing the return potential from these stocks. Another factor contributing to the boom is the attractive valuation of PSU stocks. Many of these stocks were trading at relatively lower valuations than their private sector counterparts. This made them attractive to value investors. The recent rally has helped bridge this valuation gap to some extent.
Low valuation also increased the attraction
An investment strategist said that the low valuation of PSU stocks provided an attractive opportunity for investors. With ongoing reforms and strategic initiatives, these stocks have a high upside potential. The rally in PSU stocks has also been supported by positive global market trends and a rise in foreign institutional investment. As global markets remain strong, Indian stocks, including PSUs, have benefited from the spillover effect.
Although this rally has benefited, experts advise investors to be cautious. The market can be volatile. It is important to do thorough research and consider long-term prospects before making an investment decision. The recent surge in PSU stocks reflects a combination of government reforms, strong financial performance, attractive valuations and positive global market trends. The Modi government continues its push on privatization and strategic initiatives. The performance of PSU stocks will remain a focus point for investors in the coming months.
