PSU stocks gain across the board

Eighteen PSU stocks rose by 0.28% to 10.79% at 11:23 IST on BSE on strong demand from investors for follow on public offer of state-run Power Grid Corporation of India.

State Trading Corporation of India (up 1.67%), Hindustan Copper (up 1.14%), Andrew Yule & Company (up 10.79%), Power Grid Corporation of India (up 1.72%), MMTC (up 0.47%), Bhel (up 1.03%), BEML (up 5.79%), Engineers India (up 5.69%), ITI (up 1.25%), Shipping Corporation of India (up 2.76%), HMT (up 2.24%), ONGC (up 1.36%), Oil India (up 0.37%), Coal India (up 1.93%), NHPC (up 0.28%), NTPC (up 2.05%), Neyveli Lignite Corporation (up 0.74%) and SJVN (up 0.72%) edged higher.

The BSE PSU index was up 1.07% at 5,931.75. It outperformed the Sensex, which was up 0.18% at 20,995.93.

The BSE PSU index underperformed the market over the past one month till 5 December 2013, falling 0.83% compared with the Sensex's 0.08% fall. The index, however, outperformed the market in past one quarter, gaining 10.87% as against Sensex's 10.42% rise.

PSU stocks were in demand on strong demand from investors for follow on public offer of state-run Power Grid Corporation of India. The follow-on public offer (FPO) of state-run Power Grid Corporation of India (PGCIL) was subscribed 4.92 times by 11:00 IST on the fourth day of the bidding for the FPO today, 6 December 2013. The FPO received bids for a total 387.60 crore shares, compared with 78.70 crore shares on offer, as per NSE data. Bidding for the FPO closes today, 6 December 2013, for retail investors and employees of the company.

Bidding for the FPO by institutional investors closed on Thursday, 5 December 2013.

Categorywise, qualified institutional buyers (QIB) portion comprising of foreign institutional investors (FIIs), domestic financial institutions including banks/ financial institutions/ insurance companies), mutual funds and others was subscribed 9.09 times by Thursday, 5 December 2013. Bids were received for 356.23 crore shares as compared to 39.20 crore shares reserved for the category.

Non institutional investors category comprising of corporates, individual other than retail investors and others was subscribed 0.12 times by Thursday, 5 December 2013. Bids were received for 1.43 crore shares as compared to 11.76 crore shares reserved for the category.

Retail individual investors (RIIs) category was subscribed 0.65 times by Thursday, 5 December 2013. Bids were received for 17.92 crore shares as compared to 27.44 crore shares reserved for the category.

PGCIL is offering shares in the price band of Rs 85 to Rs 90 per share in the FPO. A discount of Rs 4.50 per share on the final issue price discovered through the book-building route will be available to retail investors and eligible employees of the company. The price band was approved by the company's board of directors at its meeting held on Friday, 29 November 2013.

PGCIL is issuing a total of 78.70 crore shares through the FPO, which includes 60.18 crore fresh equity shares and disinvestment by the Government of India (GoI) of 18.51 crore equity shares held by the President of India, acting through the Ministry of Power. After the successful divestment, GoI's holding in PGCIL will come down to 57.89% from the present level of 69.42%.

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