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Anand Ram

SHARES of Public Sector Undertakings (PSU) turned euphoric on Wednesday guided by the irrefutable success of the Government in flagging off the disinvestment process.

The Bombay Stock Exchange PSU Index shot up by a whopping 126.05 points or 11.16 per cent compared to the Sensex, which jumped 115.66 points or 3.5 per cent over the previous close.

All the constituents of the BSE's PSU Index (34 stocks), without exception, saw their shares march north on Wednesday appreciated between 0.16 per cent and 20 per cent. Surprisingly, IBP was the stock that logged the lowest increase. This counter opened on an optimistic note at Rs 931 and continued on to record the day's high at Rs 989 in the initial hours of the trading session. However, the price action then sobered and continued to zig-zag in a band between Rs 880 and 920 for most of the day. Prices then waned towards the end of the day to close at Rs 861.05. There is however a strong indication that prices could possibly gravitate towards the SEBI-stipulated open offer price (mostly reflective of the bid price of Rs 1551), in the days ahead. Shares of the other disinvestment candidate, VSNL, too logged a similar trend in their prices. VSNL closed below its opening price of Rs 180, but well above Tuesday's close of Rs 168.25, at Rs 174.8 - gaining about 3.89 in the process. Prices of both these counters appear to have headed for a correction on Wednesday - probably reflective of `irrational exuberance', a phenomenon characterising investors' overreaction to these shares.

Four other constituents of the PSU Index that are in the Sensex as well, posted gains in the vicinity of 10 per cent. SBI, MTNL, HPCL, and BHEL with Sensex weights of 4.62, 3.16, 2.72, and 1.5 percentage points respectively, gained between 9.98 and 9.99 per cent on Wednesday. IPCL, which finds a place on the Nifty, gained 9.95 per cent.

Prices of petroleum retailers HPCL and IPCL took their cue from IBP's disinvestment and rose to their maximum 10 per cent on expectations that the Government will soon consider the sale of stake in these companies as well. However, State-run BEML and Rashtriya Chemicals & Fertilizers were the clear winners on the PSU circuit as their prices rose 20 per cent to close at Rs 36 and Rs 6.6 respectively. The PSU volume statistic saw SBI top the chart with 23.17 lakh shares. Even lacklustre counters with sub-par market valuations such as SAIL, Hindustan Organic Chemicals, Dena Bank and HMT had it good at the bourses on Wednesday.

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