Indian PSU stocks have maintained their bullish momentum for the fourth consecutive year in 2024. The reason behind this was strong demand for government company stocks, driven by strong financial performance, policy continuity, political stability, strong order flow and investor confidence.
The BSE PSU index, which tracks 63 companies, rose from 15,650 to the current level of 19,115. Which represents a strong gain of 3,557 points, or 23%. The index closed last year with a gain of 55.30%, indicating that investors kept adding shares to their portfolios without booking significant profits.
Over the past 4 years, the index rose from 5,781 to the current trading level of 19,115, registering a massive gain of 231%.
Despite expensive valuations, there has been strong investor interest in stocks this year too, especially after the formation of the BJP-led NDA government for the third consecutive term, which reassured investors that capital expenditure will continue till 2029.
gainers and losers
51 out of 63 stocks (81%) are likely to end the year with positive returns, while the rest, including Jammu and Kashmir Bank, GuJ Mineral, Mishra Dhatu and 9 others, are likely to end the year with negative closing returns. Could.
Among the best performing PSU stocks in 2024 was Rail Vikas Nigam, which gained 136 per cent this year compared to 166 per cent seen last year. The stock has been on a continuous bull run since its listing in 2019 and has ended each of the last 5 years in the positive sector.
This year, it crossed the ₹600 mark for the first time, and touched a new record high of ₹647 per share. Cochin Shipyard emerged as the second best performer in the index, rising 116%, building on last year’s gain of 153%.
Other shipbuilding stocks, such as Mazagon Dock Shipbuilders and Garden Reach Shipbuilders closed the year with gains of 106% and 78.28% respectively. Some other standout performers include IFCI, IREDA, HUDCO, NBCC (India), Oil India, Nalco, Bharat Electronics, General Insurance, Hind Petro, HAL, and IRFC. These companies have registered profits ranging from 50% to 111% so far this year.
Can PSU shares show further gains?
Domestic broker agency Elara Capital in its recent report stressed that there is no concern over the performance of PSUs due to reduction in capex. The broker agency is structurally positive on the PSU sector as it believes there will be further improvement in earnings, which will lead to a strong earnings cycle for the next 3 years.
Other key picks of the broker agency include GAIL and OMCs in the energy sector, and NTPC and Coal India among utilities. The broker agency says that the situation looks good for NTPC and Coal India.
Disclaimer: This information is for informational purposes only and should not be construed as investment advice. It is recommended to consult a financial advisor before making investment decisions.