 "Budget 2021")
As India gears up for a "never before" Union Budget for financial year 2021-22, hopes run high that the government could loosen its purse strings to spur the economic growth. One such way -- divestment of Public Sector Undertakings (PSUs) -- has turned investors towards such stocks. In the past, the government raised money by asking bigger PSUs to acquire smaller peers in its sector, or by selling stake in PSUs to the state-owned Life Insurance Corporation.
"PSU sector could be in focus by pushing them to perform in a market like manner. This could be done by giving their managers more freedom, linking their pay to performance and/or stock price movement, making targets based on RoE/RoCE etc. This will help improve their performance and lead to better realisation for the government upon divesting stakes in them," said analysts at HDFC Securities in a Budget expectation report.
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At the bourses, while the BSE PSU index gained 29 per cent since March 2020, as against a 61 per cent rally in the S&P BSE Sensex, the index has leaped 26.5 per cent alone in the past three months. In comparison, the frontline index is up 18.3 per cent during the period.
That said, analysts say a poor showing by PSUs on the bourses will make it tough for the central government to meet its divestment target.
So, are there any PSU stocks that continue to look attractive ahead of Budget presentation? Here's what charts say:
S&P BSE PSU index: The overall trend in the index remains up above the support of 5,400 levels. As the index now shows a rebound near 50-days moving average (DMA) placed at 5,748 mark, one can expect a rally towards 5950 levels in the days ahead, provided the overall market momentum stays strong. A decisive close above this level may see the index move towards 6,150 levels. CLICK HERE FOR THE CHART
S&P BSE PSU index: The overall trend in the index remains up above the support of 5,400 levels. As the index now shows a rebound near 50-days moving average (DMA) placed at 5,748 mark, one can expect a rally towards 5950 levels in the days ahead, provided the overall market momentum stays strong. A decisive close above this level may see the index move towards 6,150 levels. CLICK HERE FOR THE CHART
Bharat Petroleum Corporation Ltd (BPCL): After hovering around 200-days moving average (DMA) levels, the stock is attempting to conquer the immediate resistance of 50-DMA placed at Rs 392 levels. Once surpassed, the upside may see a rally towards Rs 420 levels. Therefore, the stock needs to show a positive momentum above Rs 390 levels to build an upside bias. The immediate support comes at Rs 380 levels, as per the daily chart. CLICK HERE FOR THE CHART
Indian Railway Catering and Tourism Corporation (IRCTC): As long as there is no breakdown below the 50-DMA levels, placed at Rs 1,439, the upside bias may see a breakout towards Rs 1,520 and Rs 1,600. Moreover, one can expect the addition in longs to take place above the immediate resistance of Rs 1,520 levels. The Relative Strength Index (RSI) is also trading with a positive crossover, upholding the support of 40 value, which exhibits a positive strength. At the same time, the Moving Average Convergence Divergence (MACD) is resilient to breach the zero line, indicating a rebound in the stock price. CLICK HERE FOR THE CHART
ALSO READ: Firmly behind the curve: PSUs became the biggest laggards on Indian bourses
Rashtriya Chemicals & Fertilizers Ltd (RCF): As per the weekly charts, the stock has broken above the 100-weekly moving average (WMA), and is heading towards 200-WMA placed at Rs 63. The positive bias is supported by RSI, which is also trading comfortably in a positive crossover. Additionally, the MACD is trending in an upward direction, highlighting a strong momentum with a firm bullishness. The immediate support comes at Rs 50 level. CLICK HERE FOR THE CHART
RITES Ltd (RITES): After the "Golden Cross" formation around Rs 280 levels, the railway firm's stock is witnessing profit booking, as per the daily chart. The current levels of Rs 250 - 255 are near the support of 200-days moving average (DMA) placed at Rs 248 mark. In this backdrop, the stock needs a strong close above Rs 254 (its 100-DMA) to witness a rally towards Rs 263 (its 50-DMA). A decisive move above 50-DMA could also trigger an upside towards Rs 272 – 278 levels. The recent correction has not seen aggressive selling pressure. CLICK HERE FOR THE CHART
Hindustan Aeronautics Ltd (HAL): Although stock of this defence equipment manufacturer has seen a weakness in the overbought condition of RSI, the downside breakdown stays at Rs 885 levels. Till the stock defends this support, a bounce back may push the price towards its resistance level of Rs 1,050 levels. While the volume scenario indicates a sluggish structure, the weakness is not supported by aggression. CLICK HERE FOR THE CHART
Indian Railway Catering and Tourism Corporation (IRCTC): As long as there is no breakdown below the 50-DMA levels, placed at Rs 1,439, the upside bias may see a breakout towards Rs 1,520 and Rs 1,600. Moreover, one can expect the addition in longs to take place above the immediate resistance of Rs 1,520 levels. The Relative Strength Index (RSI) is also trading with a positive crossover, upholding the support of 40 value, which exhibits a positive strength. At the same time, the Moving Average Convergence Divergence (MACD) is resilient to breach the zero line, indicating a rebound in the stock price. CLICK HERE FOR THE CHART
ALSO READ: Firmly behind the curve: PSUs became the biggest laggards on Indian bourses
Rashtriya Chemicals & Fertilizers Ltd (RCF): As per the weekly charts, the stock has broken above the 100-weekly moving average (WMA), and is heading towards 200-WMA placed at Rs 63. The positive bias is supported by RSI, which is also trading comfortably in a positive crossover. Additionally, the MACD is trending in an upward direction, highlighting a strong momentum with a firm bullishness. The immediate support comes at Rs 50 level. CLICK HERE FOR THE CHART
RITES Ltd (RITES): After the "Golden Cross" formation around Rs 280 levels, the railway firm's stock is witnessing profit booking, as per the daily chart. The current levels of Rs 250 - 255 are near the support of 200-days moving average (DMA) placed at Rs 248 mark. In this backdrop, the stock needs a strong close above Rs 254 (its 100-DMA) to witness a rally towards Rs 263 (its 50-DMA). A decisive move above 50-DMA could also trigger an upside towards Rs 272 – 278 levels. The recent correction has not seen aggressive selling pressure. CLICK HERE FOR THE CHART
Hindustan Aeronautics Ltd (HAL): Although stock of this defence equipment manufacturer has seen a weakness in the overbought condition of RSI, the downside breakdown stays at Rs 885 levels. Till the stock defends this support, a bounce back may push the price towards its resistance level of Rs 1,050 levels. While the volume scenario indicates a sluggish structure, the weakness is not supported by aggression. CLICK HERE FOR THE CHART
