PSU stocks create ₹7 lakh crore wealth in election season. Will this continue?

In the past four years, a total of 52 BSE PSU index stocks multiplied their market capitalisation by nearly 5 times. Rail Vikas Nigam Ltd, Hindustan Aeronautics Ltd, Cochin Shipyard Ltd, Hindustan Copper Ltd, Indian Bank, Bharat Dynamics Ltd, Bharat Electronics Ltd and Housing & Urban Development Corporation Ltd delivered 1,000-2,150 per cent returns in the four-year period. In the period, the worst stock was Bharat Petroleum Corporation Ltd which gave 82 per cent return. Favorable policies, such as higher defense budgets and incentives for domestic defense manufacturing, could create opportunities for defense-related companies.” Meanwhile, Jitendra Gohil, Kotak Alternate Asset Managers, said, “This unexpected outcome may trigger a major sell off in PSUs, capital goods, manufacturing, defence related stocks.” CLSA in its latest note identified 54 companies which are seen as direct beneficiaries of PM Modi’s policies of which half are PSUs. Among these are ONGC, NTPC, NHPC, SBI, Power Finance, IGL and Mahanagar Gas, CLSA said, adding, “Remarkably, 90 per cent of Modi stocks have beaten the Nifty in the election-focused rally over the past six months versus only 42 per cent of the other companies outperforming.