Banks, OMCs drag PSU index 14% in CY18; analysts advise caution

Shares of public sector undertakings (PSUs) have underperformed thus far in the calendar year 2018 (CY18). The BSE PSU index – a gauge to measure the performance of state-owned enterprises (SOE) – has slipped 14 per cent year-to-date (YTD), as compared to 4 per cent rise in the S&P BSE Sensex.

On the NSE, too, the Nifty PSE index has lost 11 per cent (YTD), as against a two per cent gain in the Nifty50.

Analysts attribute the underperformance to intermittent roadblocks / events in individual sectors such as non-performing assets (NPAs) in the banking space, rising oil prices that impacted the oil market companies etc.

According to reports, the government is planning to pare stake in select PSUs, which can keep stock prices under check going ahead, analysts say. That apart, it has been milking these companies for dividends over the past few years to bridge the fiscal deficit, which they believe, has not found favour with investors.