PSU stocks’ market capitalisation share rises to 10% of overall market

The value of shares of public sector undertakings (PSUs) has risen to 10.38% of the total market capitalization at the end of April 2024, according to data from bsepsu.com.

The market cap of PSU stocks stood at ₹43 lakh crore, compared to the overall market cap of all BSE listed firms, which stood at over ₹406 lakh crore.

The share of PSU shares as a percentage at a 7-year high and has doubled from the low recorded in September 2020, an media report stated.

The surge in the overall value of PSU shares can be credited to the massive rallies triggered due to attractive valuations, improvement in business performance and high dividend yields. The possibilities of privatization have also contributed to the increase in the price of PSU stocks.

The value of PSU stocks rose to a record high of 22% of the market in June 2009. The same figure fell to a low of 5.1% in September 2020.

Finance Minister Nirmala Sitharaman also recently spoke on the rally in PSU stocks.

She stated that the market capitalization of all 81 PSUs has skyrocketed 225% over a period of 3 years.

The Finance Minister also pointed out that the NIFTY CPSE Index has outperformed the NIFTY 50 and NIFTY 500 index.

The CPSE index is up 170% over the past five years in absolute terms, compared to the Nifty’s 96% rise over the same period.

The FM added that disinvestment had helped the companies operate more efficiently and has also benefited the employees.

Some of the major contributors to the increase in the value of holdings came from defence and banking stocks.

Stocks like Hindustan Aeronautical Limited (HAL) and Bharat Electronics Limited (BEL) have risen over 1000% and 650%, respectively, over the past five years.

Furthermore, the market capitalization of Public Sector Banks has also increased to ₹16.12 lakh crore in FY24 from ₹5.45 lakh crore in FY21.