BSE PSU index hits highest level since December 2010; SAIL, BHEL up over 8%

Engineers India, NLC India, IFCI, Union Bank, NMDC, IDBI Bank, Corporation Bank and PNB were up in range of 5% to 8% on the BSE

Shares of public sector undertaking (PSU) companies including banks are on a roll with the BSE PSU index hitting nearly seven-year high after strong rally in metal, banking, oil & gas sector stocks.

At 01:17 PM; the S&P BSE PSU index was up 1.5% at 9,539, as compared to 0.11% rise in the benchmark S&P BSE Sensex. The PSU index hit an intra-day high of 9,657, its highest level since December 3, 2010 on the BSE.

Steel Authority of India (SAIL) and Bharat Heavy Electricals (BHEL) were up more than 10% each in intra-day trade, while, Engineers India, NLC India, IFCI, Union Bank of India, NMDC, IDBI Bank, Corporation Bank and Punjab National Bank (PNB) from the index up in the range of 5% to 8% on the BSE.

In an attempt to support credit growth and fuel job creation, the government on Tuesday decided to take a massive step to capitalise public-sector banks (PSBs,) in a front-loaded manner.  The government has announced a large re-capitalisation programme of Rs 2.1-lakh-crore for state-owned banks.

“This would help remove the binding constraint faced by state-owned banks in resolving the bad loan problem and meet the new capital adequacy norms by FY19. The proposed move will likely help re-rate state-owned banks from their depressed valuations,” analysts at IIFL Institutional Equities said in note.

The government also reinforced its commitment to providing the country with more efficient transportation by launching a mega road building programme of Rs 6.92-lakh-crore.

The latest announcement provides a positive push to the infrastructure segment in the economy. The government will have to draw a definitive road-map for the timely completion, fund mobilization as well as streamlining of bottlenecks like land acquisition for the programme to be beneficial, according to the rating agency CARE Ratings.

COMPANY	LATEST	PREV CLOSE	GAIN(%)
S A I L	76.00	66.95	13.5
HIND.ORGAN.CHEM.	20.95	19.05	10.0
B H E L	98.30	90.60	8.5
ENGINEERS INDIA	170.35	157.95	7.9
MADRAS FERT.	29.90	28.10	6.4
NLC INDIA	100.60	94.55	6.4
M T N L	21.35	20.10	6.2
NMDC	128.30	121.10	6.0
HMT	38.15	36.35	5.0
S T C	182.75	174.95	4.5
T N TELECOM.	1.23	1.18	4.2
F A C T	43.10	41.35	4.2
NBCC	256.00	246.60	3.8
HIND.COPPER	70.25	67.80	3.6
BHARAT IMMUNOLOG	23.30	22.60	3.1