NTPC stake sale to boost market sentiment: Analysts

The government's nod for stake sale in state-run power utilities - NTPC and Satluj Jal Vidyut Nigam (SJVNL) - is expected to bolster investor sentiment and propel the stock markets in days to come, analysts said.

The Cabinet Committee on Economic Affairs (CCEA) today approved five and 10 per cent disinvestments in NTPC and SJVNL respectively.

"The government is confident about the recovery in market and the economy, that is why it is going ahead with its divestment plans. The market is expected to react positively to the news and it indicates a rally in the days ahead," Geojit BNP Paribas Financial Services Research Head Alex Mathew said.

Kotak Mahindra Mutual Fund Equities Head Krishna Sanghvi said, "The government has reaffirmed that it is prone to adopt a more liberalised economic policy and is committed to increase investors' wealth. However, the move would not add any value to the company's financial position."

Marketmen believe a follow-on public offer (FPO) of NTPC, the second most valued public sector unit with a market capitalisation of over Rs 1.77 lakh crore, would help increase trading volumes at the counter.

"PSU stocks generally have less volume and low volatility. The market would now look at the issue price of the FPO and an increase in demand would help to shore up supply," SMC Global Vice President Rajesh Jain said.