Shares of public companies are on the rise. Bharat Heavy Electricals (BHEL), Power Finance Corporation (PFC) and REC rose to all-time highs today in an otherwise flat market. Last week, Ircon International and Indian Railway Finance Corporation reached their highest level in 52 weeks.
Analysts said many more PSU (Public Sector Undertakings) stocks will set records in the coming days as the cyclical trend is in their favor. They further noted that PSU stocks will provide good returns as prices are likely to double in the short to medium term. The renewed investor sentiment in SOEs is also attributed to increased capital expenditures that will benefit these companies.
BHEL rose 10 per cent from 52-week high of Rs 82.25 on frantic buying today. The stock cut a portion of its gains to close the day at Rs 81.95.
BHEL is up 35.12 percent year-to-date against a 16.20 percent gain in the BSE Capital Goods index and a 5.26 percent gain in the broader Sensex index.
PFC gained nearly 6 percent to a record high of 136.90 on BSE. The company reported a net profit of 2,998.75 crore for the September quarter of this fiscal year on a revenue of 10,078.11 crore.
A navratna company REC, formerly Rural Electrification Corporation, reached an all-time high of 109.85 for hectic buying. The stock also registered high volumes as more than 52 lakh shares changed hands on BSE.
Last week, another government-run infrastructure finance company, Indian Railway Finance Corporation (IRFC), had reached a new 52-week high of Rs 28.70.
IRCON International, a railway stock, also jumped to a 52-week high of Rs 62.10 on BSE last week.
Railroad stocks were boosted as they will reap the benefits of the government’s increased capital spending on infrastructure, stockbrokers had said.
“Railway stocks such as IRCON, IRFC and RAILTEL will be on traders’ radar as the government plans to increase its capex by 19 percent and these stocks will benefit the most,” said Rahul Sharma, Research Head, Equity 99 advisors.
Vishal Wagh, research head of Bonanza Portfolio, noticed a cyclical trend in PSU stocks and said that this cycle has turned bullish since the lows of 2020 and more of them are heading for all-time highs.
“There is a 10-year cycle in PSU stocks. From 1990-2000 there was a very bearish trend. From 2001-2010 there was a very bullish trend and from 2011-2020 there was another bearish trend,” he said. noted.
The said cycle is observed in more than 90 percent of PSU stocks, with a one-year plus-minus.
“Now this cycle is slowly gaining momentum. Down the line, we’ll see a lot of PSUs hit 52-week highs,” he said.
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