Public sector, banking indices pounded

ONGC, GAIL slaughter brings down the PSU barometer

The Bombay Stock Exchange's public sector and banking indices have been the worst hit in the recent bout of volatility which has knocked off 3.24 per cent per cent off the benchmark Sensex from January 14 to January 27.

The BSE Bank index has crashed from its one-month peak of 3112 on January 14 to close at 3026 on Tuesday, down 6.11 per cent.

The BSE PSU index has gone down from 4209 to 3970.11 over the same period, down 6.02 per cent. However, from its one-month peak of 4361 on January 8, the PSU index has lost almost 10 per cent.

According to market sources, among the PSU stocks, oil PSUs were badly hammered in the last two weeks with ONGC and GAIL being the major reasons for the carnage.

Both these stocks have contributed 25 per cent and 33 per cent, respectively, to the fall in the BSE PSU index as the stocks were hammered on rumours that both the company's IPOs will hit the market at a huge discount to the current price.

As a result, these stocks came in for some heavy selling pressure in the last two weeks with ONGC falling 3.52 per cent from Rs 840.70 on January 14 to Rs 811.05 on January 27.

GAIL lost 3.84 per cent to Rs 229.05 over the same period. Ambreesh Baliga, vice president, Karvy Stock Broking said, "The oil PSUs specially ONGC and GAIL were hammered on the back of rumours that their IPOs will hit the market at a huge discount. That was the reason there was selling pressure along with the general perception that the disinvestment exercise will be postponed till after the fresh elections."

The other sector which was equally hammered was the BSE Bank index.

According to an equity analyst with a leading broking firm, "Since December, bank stocks were in the limelight and have appreciated quite sharply.

And with quarterly results of most PSU Bank nearly flat and even private banks showing a marginal profit with treasury income still the major contributor, there is reshuffling of the portfolio of bank stocks.

An equity fund manager with a domestic mutual fund said the there is reshuffling happening in the equity portfolios with the weaker bank making way for either stronger banks which are not over dependent on treasury income or to other sectors such as auto and commodities which can yield better returns. However, most funds are not completely exiting from the banking sector, the fund manager added.

PSU Bank stocks were the major losers as the scrips have lost in the range of 10 to 15 per cent in the last two weeks.