PSU shares gaining on buy back news

PSU stocks are trading firm in today’s market with likes of MTNL, ONGC, MOIL, RCF, BEL, MMTC, GAIL, Hindustan Copper, Coal India, MRPL, Engineers India, Balmar Lawrie and HMT gaining more than 1 per cent. MTNL is the leader in the pack, and has gained more than 6 percent,  followed by MOIL which is trading up by 4 .3 percent and ONGC which is trading up by almost 4 per cent.

The buzz in the PSU stocks is due to reports that government may ask the Central Public Sector Enterprises (CPSEs) to buy back the shares in coming months.  The CPSEs put together are believed to be holding Rs. 2.55 lac crores of surplus cash and government may use this cash to buy back shares for those companies where the capex requirement is low. With the stock prices going up post buy back reports, the divestment of PSUs will be easier to execute for the GoI. Buy back of PSU shares will certainly help achieve the divestment target of Rs. 56,500 crores set in the budget.

Certain media reports confirm that the buy back will be for those companies in which the stake held by GoI is 100%, and the list is already ready for those companies which will be divested post buy back. The BSE PSU index after opening in red is trading firm with almost 0.5 per cent gains on an intra day basis.