Shares of various public sector companies today defied the weak broader market trend and gained up to 5% after the government approved buyback of shares by certain PSUs as part of the divestment programme.
While, the names of potential buyback candidates are yet to be known, some the gainers in the PSU counter were -- MMTC, Coal India, NMDC, Shipping Corporation, MTNL, HMT, STC, Hindustan Copper, Engineers India, and NHPC.
STC was the biggest gainer in the PSU pack and settled for the day with a gain of over 5% at the BSE. MTNL gained 4.65 per cent, HMT by about 4.1% and NDMC jumped by over 2.1% in a weak market.
Rashtriya Chemicals, NMDC and National Fertiliser settled with over 2% gain, while Shipping Corporation, EIL, and MMTC ended the day higher by over 1.8%.
NHPC, Neyvelli Lignite and National Alumunium closed for the day with over 1% gain.
The surge in these stocks assumes significance as the BSE benchmark index Sensex settled in the negative zone at 17,584, down 168.71 points.
"PSU in this rise of last two and half months have outperformed indices for the whole by 50% as these have risen 30% from the lows of December 2011 as shown by BSE PSU index," Wellindia Group Senior Equity Analyst Vivek Negi said.
The buyback proposal will allow the government, which has not been able to reach anywhere near the disinvestment target of Rs 40,000 crore in 2011-12, to raise funds by selling its stake in the PSU to the same undertaking.
Funds raised through the buyback of shares would to some extent help the government in bridging the fiscal deficit which during the first 10 months has exceeded the annual target.
The names of potential buyback candidates are yet to be known, as further details would be finalised by the boards of individual public sector entities.