PSU Stock Market Correction: Experts Cite Possible Reasons Behind The Decline – News18

On September 12, the shares of the Public Sector Undertaking (PSU) saw a dip. PSUs are public-sector companies that are established and run by the government of India or the state governments. These were established to earn profit for the government, control monopolies, and offer products and services to the customer at low costs.

As per experts, it is difficult to predict if there will be an upcoming wave of correction in the next few weeks. Since March 28, shares of Bharat Electronics, Power Finance Corporation, and Rural Electrification Corporation had surged from 60% to 137%; but on September 12, they saw a sharp correction of about 7% to 8%. On the other hand, shares of Power Finance, Mazagon Dockyard, and REC saw a decline.

AK Prabhakar, head of research at IDBI Capital, said in an interview: “The valuation of PSU stocks had increased a lot, and because of this, it became difficult for these stocks to survive at such a high level. This is the reason there is a correction in them, and this is good for the stocks.” Following this, he mentioned that mid-cap and small-cap stocks suffered the most due to the fall on September 12. He further stated, “About 90% of the stocks in both categories closed in red, and PSU also came under the grip of its recession.”

Several other investor heads are expressing their concern about mid-cap stocks. According to Deepak Jasani, head of research at HDFC Securities, “The fall in PSU stocks could be due to the selling of funds, and people are waiting for profit and sales.”

As per the Vice President and head of retail research at Motilal Oswal Financial Services, Siddharth Khemka, “There is no change in the fundamentals of PSU stocks at the moment. He mentioned that it is difficult to say how long this profit collection will continue.”

Note: A market correction means a decline of about 10% to 20% in the value of a market index and usually lasts for a few weeks or months.