The share of all listed public sector stocks in the BSE's total market capitalization has dropped to a 15-month low amid persistent selling pressure. As of February, PSU stocks accounted for 14.61 percent of the total market cap of all BSE-listed firms—the lowest since November 2023—down from a peak of 17.77 percent in May 2024.
The combined market capitalisation of 103 listed PSU firms stood at Rs 57.43 lakh crore in February, reflecting a loss of Rs 24 lakh crore from its all-time high of Rs 81.38 lakh crore in July. In comparison, their total market capitalisation was Rs 64.88 lakh crore in January and Rs 66.34 lakh crore in December.
Out of the 103 listed PSU firms, seven have declined over 60 percent from their recent 52-week high, while 28 have corrected between 50 and 59 percent. Another 34 firms have fallen between 40 and 50 percent, and 32 have declined between 20 and 40 percent.
Experts believe PSU stocks are under pressure due to weak Q3 FY25 earnings and high valuations. Lower order inflows in defence and railways have raised growth concerns. After a multi-year rally, profit booking has intensified, triggering corrections. While some PSUs remain strong, weak earnings visibility and reduced government spending add to volatility.
A shift towards private sector stocks in banking, IT, and consumption has further dampened PSU interest. Despite some attractive valuations, market sentiment remains weak, with downside risks persisting, add experts.
Mayank Mundhra, FRM- VP Risk & Head Research Abans Group said the Union Budget 2025 dampened market sentiment by lowering capital expenditure growth. The government allocated Rs11.21 lakh crore, which fell short of expectations, particularly for sectors like railways, thus weakening investor confidence. Markets had anticipated higher government spending on infrastructure, railways, and defence, hoping for a stronger push to drive PSU growth. The absence of sector-specific incentives further weighed on investor sentiment.
Among the biggest losers, Dredging Corporation of India has dropped 65 percent, followed by Chennai Petroleum Corporation and MMTC, down 64 percent and 62 percent, respectively. Other major decliners include Shipping Corporation of India, Hindustan Organic Chemicals, and Ircon International, each losing slightly over 60 percent.
Analysts said the Nifty PSE Index has witnessed a sharp decline of almost 32 percent from its peak levels, indicating sustained bearish momentum. On the weekly chart, the index is trading below its short-term and medium-term EMAs, suggesting continued selling pressure.
Immediate support is placed near the 7,800 mark, and a breakdown below this level could extend the decline toward the 7,200–7,000 range, which aligns with long-term EMA levels. Given the current weak trend, a sell-on-rise strategy is advised near the 8,700–9,000 range, with a decisive breakout above 9,500 needed for a trend reversal, they added.
Hardik Matalia, Derivative Analyst, Choice Broking said for now, it is best to be selective. Long-term investors may find opportunities in fundamentally strong PSU stocks like BEL, HAL, and NTPC, while traders should wait for stability before entering new positions. Monitoring FII activity, government policies, and global market trends will be key in determining whether the sector can regain strength.
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