Modi cabinet 2024: After the formation of the Modi 3.0 government in New Delhi and Nirmala Sitharaman being retained as Finance Minister, the market is expecting continuity of the business and economic policies for the next five years. From the Indian stock market, investors must have their fingers crossed that PSU stocks will deliver the same kind of returns in the next five years. They said that the Modi government kept a special focus on the revival of PSU companies, and they were able to compete against their private peers during the last five years. So, Nirmala Sitharaman being retained as Finance Minister in the new Modi 3.0 cabinet means a further extension of those policies. Hence, one should hold PSU stocks if they already have in their portfolio. They also advised investors to look at high-quality PSU stocks in the railways, banking, energy, power and infrastructure sectors.
Modi 3.0 cabinet: PSU stocks in focus
On what Nirmala Sitharaman as FM means for the PSU stocks, Avinash Gorakshkar, Head of Research at Profitmart Securities, said, “Ever since Modi government took over in centre, they have been instrumental in the revival of the PSU companies and enabling them to compete against their private peers. This process took some time and started paying dividends in the Modi 2.0 government as most of the PSU stocks outperformed their private peers, and they delivered multi-bagger returns with a huge margin in the last five years. Shares like RVNL, IRFC, Bank of Baroda, NBCC, etc., have delivered whopping returns to their shareholders in recent years. This could become possible because of FM Sitharaman’s policies in the last five years. As Sitharaman has been retained as FM for the next five years, the market is expecting further extension of those policies with more adaptation and focus on the competitiveness of PSU companies.”
Discussing potential value picks in the PSU segment, Sandeep Pandey, Founder of Basav Capital, highlighted, “In recent years, we have witnessed various PSU banks generating funds, indicating their anticipation of sustained business volume. Despite the high-interest regime having peaked, they are optimistic about sustained business growth. This suggests that the market may see further potential in the PSU banks, as the lenders have ample liquidity to meet the demand in the next four to five years. Similarly, the power, energy, and infra segment is expected to remain a lucrative sector for the Modi government, with continued policy support driving business growth.”
“Railway stocks are expected to remain in focus as the Modi government has been extra instrumental in this segment. Modi 3.0 in New Delhi is expected to kickstart fresh rail reforms and privatisation of the operations of the Indian Railways, which may boost railway stocks in the medium to long term,” said Avinash Gorakshkar.
PSU stocks to buy
Asked about the PSU stocks that one can look at for value picks, Avinash Gorakshkar of Profitmart Securities said, “Shares of RVNL, IRFC, and IRCTC in the railway segment, Coal India Ltd and Indian Oil Corporation in the power and energy segment can be a good value pick for long term investor in Modi 3.0 tenure. In the PSU ank segment, one will have to look at the cost of funding. PSU banks like Canara Bank, Union Bank of India, Bank of Baroda, and Punjab National Bank (PNB) are highly active in controlling their CASA. Hence, these PSU bank shares qualify as one of the value picks in the PSU bank segment.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 11 Jun 2024, 12:04 PM IST
