The market value of government companies increased by Rs 200 crore from the record level of July. Erosion of Rs 15.4 lakh crore – ..

Ahmedabad: Indian stock market has been witnessing heavy selling by foreign investors continuously for the last few months. There has been a huge upheaval in the shares of public sector companies due to the all-round selling going on in the market. The share of state-owned enterprises in the total market cap of the country’s listed companies has fallen to an 11-month low due to heavy selling in shares of government-owned companies.

According to the report, at present the share of PSU companies in the total market cap has come down to 15.34 percent, which is the lowest after December 2023. In May, the share of government enterprises in the total market capitalization reached the highest level of 7 years at 17.77 percent. At present the market cap of 103 PSU companies is Rs 66.06 lakh crore. In the month of July, the market value of these companies was at a record high of Rs 81.38 lakh crore, which means the market capitalization has reduced by Rs 15.4 lakh crore.
Amid the selling, five of the 103 listed PSU companies fell more than 50 per cent from their one-year highs, while shares of 21 state-owned enterprises fell between 40-49 per cent. Apart from this, shares of 40 companies have fallen by 30-40 percent and shares of 24 companies have fallen by 20-30 percent. Shares of only 13 companies have fallen by 5-20 percent.

Talking about BSE PSU index, a huge fall of 17.5 percent has been recorded from the record high as compared to 10 percent fall of the benchmark index. Shares of Mahanagar Telephone Corporation fell 57 per cent from their 52-week peak, shares of Cochin Shipyard fell 56 per cent and shares of Chennai Petroleum Corporation fell more than 55 per cent.

The valuation of this stock is falling due to declining profitability of PSU companies and upcoming margin pressure and reduced scope in the sector. Moreover, the slowdown in the economy is also creating more pressure, which is visible in the form of slowdown in GST collections and government spending.

Nearly 50 government-owned companies underperformed in their September quarter results, while 14 reported losses and 29 reported decline in profits on a year-on-year basis. About 20 companies have seen marginal or less than 10 percent increase in profits.