It’s not just the image of the government that has skyrocketed over the past two weeks. The paper wealth of the Union government went up by a whopping Rs 89,458 crore since the coalgate-induced lows hit in early September.
According to an analysis of some 47 listed state-owned firms by the BS Research Bureau, the combined value of the government’s holdings in these firms went up from Rs 11.21 lakh crore to Rs 12.10 lakh crore, a gain of 7.8 per cent. Of these, 44 ended with gains during the period beginning September 5, the day when the Sensex closed at the recent low of 17,313.
The biggest gains for the government came from its holdings in the 20 banks. As most top banks gained over 20 per cent, the sector added Rs 37,525 crore to the government wealth. While State Bank of India alone contributed Rs 15,720 crore to this, Canara Bank was the largest gainer during the period, zooming 35 per cent.
| TOP CONTRIBUTORS TO GOVERNMENT WEALTH | |
| Company | Gain in value of holdings (Rs crore) |
| State Bank of India | 15,740.69 |
| Oil & Natural Gas Corp | 12,052.37 |
| Coal India Ltd | 7,702.80 |
| Steel Authority of India | 5,724.67 |
| NMDC Ltd | 4,960.09 |
| Bharat Heavy Electricals Ltd | 4,027.85 |
| Power Finance Corporation | 3,751.15 |
| Bank of Baroda | 3,719.68 |
| Canara Bank | 3,360.00 |
| Punjab National Bank | 3,211.76 |
| Compiled by BS Research Bureau | |
The divestment-bound firms added Rs 19,978 crore to the government’s paper wealth. SAIL, which gained 21 per cent, NMDC and BHEL were the biggest contributors. Among the nine firms in the category, only OIL India ended up with a marginal erosion in value. The stock fell 1.3 per cent shaving off Rs 290 crore.
Among the remaining 18 firms, which accounted for gains of Rs 31,954 crore, ONGC and Coal India were the top contributors. Two of these, Hindustan Petroleum and Powergrid fell marginally losing 1.6 per cent and 2.16 per cent, respectively.
The Sensex has gained nearly 1,500 points in the space of two weeks, riding on key government decisions, such as deferment of the General Anti-Avoidance Rules, an increase in diesel prices and foreign direct investment in retail and aviation. The government’s decisions have enthused analysts and foreign investors, looking for credible opportunities to invest cheap money unleashed by the Federal Reserve and the European Central Bank.
Analysts say the reform push of the government should continue for the market to go up further. “We are enthused by the reform initiatives announced by the government. These open the doors for foreign monies to flow in. However, we believe, these will now have to be followed up by some core reforms, which will encourage further investments in the manufacturing segment and, hence, attract more money,” said Dipen Shah, head of PCG (private client group) research, Kotak Securities, said in a note.
Shah hoped further progress on issues like power, mining and land acquisition would provide a much-needed fillip to investments, which have been held back till now. “The markets will take cues from these initiatives to stabilise and move up further,” he added.
