CPSE index cracks 5% on profit booking; PFC, RVNL, MSTC tank up to 16%

In the past one month, the CPSE index has rallied 19 per cent, while, in three months, it has soared 53 per cent

Shares of Central Public Sector Enterprises (CPSEs) tumbled up to 16 per cent on Friday as investors booked profit in stocks with heavy volumes. At 11:04 am, the S&P BSE CPSE Index was down 5.2 per cent, as compared to 0.22 per cent decline in the S&P BSE Senex.

The S&P BSE CPSE index is designed to measure the performance of CPSEs listed on BSE. CPSEs are companies for which 51 per cent or more of the direct shareholding belongs to the Central Government of India.

The CPSE index had hit a record high of Rs 3,685.31 on Thursday, February 8, 2024. In the recent past, the index has outperformed the market by a wide margin. In the past one month, it has rallied 19 per cent, while, in three months, it has soared 53 per cent. Besides, thus far in the financial year, the index has zoomed 113 per cent.

Among individual stocks, shares of MSTC tanked 16 per cent to Rs 925 on the BSE in the intraday trade today. In the past one month, till yesterday, it had zoomed 76 per cent.

Shares of Power Finance Corporation, meanwhile, slipped 12 per cent to Rs 411.35, while those of Rail Vikas Nigam (RVNL) plunged 11 per cent to Rs 250.50, followed by KIOCL, Mahanagar Telephone Nigam (MTNL), BEML, BEML Land Assets, General Insurance Corporation of India, NBCC (India), NHPC, Shipping Corporation of India and SJVN which are down in the range of 7 per cent to 10 per cent.

"When valuations are high, the bears will use any negative news to push the market down. The slightly negative news, from the market perspective, came Thursday in the slightly hawkish comments of the RBI Governor," said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

The good news that the economy is doing better-than-expected and a GDP growth projection of 7 per cent and CPI inflation of 4.5 per cent for FY25 was ignored. The selling was aggravated with FIIs, too, running with the bears. There is a significant build up in the short position of FIIs. This normally happens along with the rise in the US 10-year bond yields which is now at 4.15 per cent, he added.

"FII selling and bear onslaught are unlikely to take the market down significantly. There will be strong buying on dips. The sustained flows into mutual funds which are gathering momentum will enable the DIIs to buy aggressively. A good investment strategy now would be to buy the bluechips which FIIs are selling," Vijayakuamr said.