EPFO money flow chasing investors for PSU Midcaps

On Thursday, investors targeted mid cap public sector shares, on expectation of a part of the portfolios of equity schemes handling Employee Provident Fund (EPFO) money, as starting from July, Government's authoritative instruction is EPFO now can invest 5 to 15 per cent of its incremental collection in equity markets. By next year March, it will increase to 5 per cent, starting from 1 per cent. This implies that during this fiscal EPFO can invest Rs 4000 to 5000 crore in equities.

The Employees' Provident Fund Organisation (EPFO) is one of the world's largest with more than USD 100 billion of assets from some 80 million members . It has begun by investing in Indian exchange traded funds, with the goal of earning higher returns. The investment in equity instruments was approved by the government in April 2013.

Because of Government's ownership to PSU, all investors hope that EPFO money may first find  PSU companies. Also government has planned to sell shares of its companies through the exchange traded funds (ETF) route which also highlights interest in PSU stocks.

By forming ETF, government could do divestment, for well performing companies 70 per cent of stocks and 30 per cent for that which are yet to perform well. This could get a fair response for EPFO. For last few trading sessions, the PSU companies such as STC India, Hindustan Copper, MMT, MTNL, GAIL and SCI showed increase in trading volumes.