Monday, March 4, 2024
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HomeStocksSJVN Crashes 20%, Banking Stocks Slide Post RBI Meet

SJVN Crashes 20%, Banking Stocks Slide Post RBI Meet

Monday’s trading session saw a sharp decline in Indian state-owned companies, dragging the S&P BSE PSU index down by 3.02% as of noon. This sell-off comes after a period of strong gains for PSUs, with many stocks delivering multibagger returns in the past year. PSU Total Market Cap is now lower by Rs 6 lakh crores! So, what triggered this sudden reversal?

Top Losers: A Deep Dive

The table below highlights the top five decliners within the PSU pack, showcasing their single-day losses and volume surges:

Company Name CMP (Rs) % Change Intraday Vol (million) Average Vol (million)
SJVN Ltd. 112.45 -19.99 110.89 95.5
Bharat Dynamics Ltd. 1609.9 -12.44 1.397 1.204
NIACL Ltd. 256.8 -11.29 3.66 6.152
Mishra Dhatu Nigam Ltd. 408.85 -11.1 2.291 1.906
NHPC Ltd. 86.1 -10.55 233.884 264.856

SJVN Ltd. emerged as the biggest loser, plummeting 20% and hitting the lower circuit limit. This drastic drop can be attributed to the company’s lackluster performance in Q3. Other notable decliners include Bharat Dynamics Ltd., The New India Assurance Company Ltd., Mishra Dhatu Nigam, and NHPC, all witnessing losses exceeding 10%.

Reasons for the Downfall

Several factors contributed to the sell-off in PSU stocks:

  • Profit Booking: After a significant rally in the past year, investors seem to be booking profits, especially after weak financial performances from some major PSUs.
  • RBI Policy Stance: The Reserve Bank of India’s (RBI) decision to maintain the repo rate at 6.5% and lack of clarity on future rate cuts dampened investor sentiment in banking stocks, which are a major component of the PSU index.

Read: RBI’s Transparent Measures: All-Inclusive Loan Interest Costs

  • PSU Performance: Recent lackluster performance by some PSUs, like SJVN Ltd., triggered concerns about their future prospects, leading to selling pressure.
  • Absence of Triggers: With key events like the interim budget and MPC meeting concluded, and US Fed rate cuts further postponed, the market lacked near-term triggers, prompting profit booking.

Should You Stay Invested?

While the recent decline is concerning, analysts maintain cautious optimism about PSU stocks, particularly banking stocks. However, they advise caution due to the significant rise in valuations, leading to relatively high price-to-earnings ratios.

Conclusion

The sharp decline in PSU stocks highlights the volatility of the market and the importance of careful analysis before making investment decisions. While the long-term prospects of some PSUs remain positive, investors should closely monitor their performance and broader market conditions before entering or exiting these stocks. Remember, past performance is not necessarily indicative of future results.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions
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