PSU scrips set to sizzle

Public sector company (PSU) stocks are set to sizzle on the bourses after the Centre's announcement that they will have to pay the minimum level of dividends. This means PSU stocks will become strong dividend players and bonus candidates.

Most market entities were enthused by this news and said PSU companies would attract good buying attention on the bourses as investors try and lap up these scrips.

Analysts said profit-making PSUs like Mahanagar Telephone Nigam Ltd, Steel Authority of India Ltd, and oil firms like Indian Oil Corporation, Oil and Natural Gas Corporation, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd would be in demand.

"Investors will buy into these counters from the dividend yield point of view," Ambareesh Baliga, vice-president at the Karvy Stock Broking, said. He added that petroleum companies were facing pressure on account of rising oil prices and it was to be seen if profitability would be maintained.

Brokers said the market was reacting to any kind of story and this should be well received, at least initially. A senior fund manager from Birla Sun Life Mutual Fund said better clarity in dividend pay-outs would improve sentiment for PSU counters on the bourses.

Vijay Saraf of Centrum Securities added many investors looked to buy good dividend yield scrips and this news would definitely attract their attention. In fact, players said many mutual funds would look to buy into good dividend yield counters.