Shares of the PSU pack - a recent investor favourite - were hit hard in the market selloff, with RVNL, IRFC, Mazagon Dock, and NBCC witnessing up to 8 percent cuts on August 5.
The BSE PSU and CPSE indices plummeted by up to 4 percent, in-line with the fall in Sensex and Nifty, with all components trading in the red.
The correction was primarily driven by weak global cues as disappointing US job data has caused worries about a potential recession in US, while there are fears of a reverse carry trade in Yen after a rate hike by the Bank of Japan.
While the near-term market sentiment may be negative, the long-term outlook on India's growth trajectory remains positive, backed by strong macroeconomic fundamentals, said Atul Parakh, CEO, Bigul.
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Rail Vikas Nigam Ltd (RVNL) is the biggest loser in the PSU pack, falling nearly 8 percent. Indian Railway Finance Corporation Ltd and IRCON International Ltd were down 7 percent each, whiel RailTel Corporation has plunged nearly 7 percent during trade on August 5. Shares of Mazagon Dock Shipbuilders fell over 6.5 percent, in line with the sell-off in other state-run entities and the broader markets.
Shares of Cochin Shipyard, Shipping Corporation of India, and Garden Reach Shipbuilders Ltd. were locked in a lower circuit of 5 percent each. Great Eastern Shipping Company stock also fell nearly 5 percent.
Defence PSU stocks including Bharat Dynamics, Bharat Electronics, Hindustan Aeronautics and BEML also fell up to 6 percent. NBCC India (Ltd) tanked over 7 percent in the early session, while MMTC was also down 6.5 percent. Housing & Urban Development Corporation (HUDCO) also cracked 6 percent.
Other key PSU stocks including Life Insurance Corporation of India, BHEL, SJVN, NLC India, GIC, SAIL, Coal India, Power Finance Corp, Hindustan Copper tumbled around 6 percent each.
Atul Parakh has advised investors to not enter the market immediately, adding that better entry levels will emerge. "Investing in fundamentally strong companies operating in high-growth potential sectors at appropriate valuations is recommended. However, profit booking in over-valued stocks is advisable due to the near-term market situation," he said.
Also Read | 'Wait and watch' not 'buy on dip', advise experts amid global uncertainty
Given the prevailing bullish trend, it is unlikely that prices will remain low for an extended period. A recovery from lower levels is a probable scenario, according to Vishnu Kant Upadhyay, AVP, Research and Advisory at Master Capital Services.
"Every market decline should be viewed as an opportunity to establish new long positions for long-term holding," he told Moneycontrol.
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