Select PSU shares rally on buyback hopes

Shares of select public sector undertakings (PSU)— MMTC, Hindustan Copper, STC India and Dredging Corporation of India are trading higher for the second straight day, after market regulator Securities and Exchange Board of India (Sebi) allowed companies to buy back their own equity from shareholders.

The government has been thinking of raising funds through the buyback route, as it has not been able to raise money through sale of equity in public sector units on account of uncertainty in stock markets. Under the buyback mode, the government can raise money by selling its equity in the company to the PSU itself.

According to market reports, the Cabinet is likely to give a go-ahead to the Department of Disinvestment (DoD) proposal for buyback of government equity by state-owned companies.

Once the Cabinet gives its nod to the DoD plan, government institutions, banks and companies interested in buying government stake in PSUs will be able to send their proposals, added the report.

Among the individual stocks, MMTC rallied 10% to Rs 679, followed by STC India and Hindustan Copper (up 8% each) and HMT, NMDC and Dredging Corporation of India are trading higher by 4% each on the Bombay Stock Exchange.