Limited opportunities with PSUs; bet on dividend yield, momentum: Bernstein

Within in PSU space Bernstein prefers ONGC, Coal India, IOC, Bank of Baroda, GAIL, BPCL, Canara Bank, HPCL, Oil India and MRPL.

After a stupendous rally in the last one year that saw the S&P BSE PSU index rally nearly 90 per cent as compared to 19 per cent surge in the benchmark Nifty50 index during this period, fresh investment opportunities in the stocks of public sector undertakings (PSUs) remain limited, suggests a recent note by Bernstein.

Relative to historical averages, the PSU index, Bernstein cautions, is trading at a steep valuation of 11.2x forward price-to-earnings (PE) and 1.8x price-to-book (PB), which is one standard-deviation (+1SD) above the historical average. By definition, standard deviation is the statistical measure of market volatility, measuring