PSU stocks climb up to 9% as exit polls predict landslide victory for BJP

Shares of state owned companies cracked the upper ceiling on the BSE in Monday’s early trades. The BSE CPSE index was up 6.9 per cent at 4,389 levels. 

Power Finance Corportaion (PFC) soared 9.31 per cent at Rs 538.55, Powergrid surged 8.18 per cent at Rs 335.25, and IRFC shot up by 6.61 per cent at Rs 189.55 per share in intra day deals. 

Other public sector undtertaking (PSU) stocks such as MOIL, NTPC, NBCC, BPCL, NHPC and Ircon edged up between 5-6 per cent each on the BSE in intraday trade on Monday. 

This comes after exit polls on Saturday gave a clear victory and a thumping majority to the BJP led National Democratic Alliance (NDA) in Lok Sabha polls. 

 

A dozen exit polls conducted by various agencies and media organisations gave the NDA anywhere between 316 and 400 seats. The exit poll results were published on Saturday after the final phase of the seven-phase elections, which had begun on April 19, concluded.

Other triggers for the stellar opening of markets also include the greater than expected Gross Domestic Product (GDP) data and GST collections for the fourth quarter of financial year 2023-24.

India’s GDP growth rate in the quarter ending March 31, 2024 grew by 7.8 per cent. This figure surpassed the Reserve Bank of India’s (RBI) estimate of 7 per cent, according to projections made in its April monetary policy review.

GDP growth provisionally stands at 8.2 per cent for FY24, as compared to the growth rate of 7 per cent in FY23. Earlier, government estimates had placed GDP growth for FY24 at 7.6 per cent. 

Further, the country's gross GST collections rose to Rs 1.73 trillion in May, growing 10 per cent year on year driven by increased revenues from domestic transactions, the finance ministry said on Saturday.

“The exit poll numbers are very strong for incumbent govt and I think markets may not have priced in such strong numbers and we could see some reflection of that on Monday opening trade. Overall it's positive for the markets in short as well as long term. Also the recently released good GDP growth data should also provide support to existing positive momentum,” said Narendra Solanki, Head Fundamental Research, Investment Services, Anand Rathi Shares and Stock Brokers.

Meanwhile, those at Kotak Institutional Equities cautioned investors on the exuberance over PSU stocks, trading at outlandish multiples while factoring in optimistic volume and profitability assumptions. Analysts at the brokerage said, a large BJP victory may sustain rich-to-bubble multiples in parts of the market that include automobiles, capital goods, and PSUs for longer. The lofty embedded expectations coming to fruition would be surprising, they added. 
 

At 09:38 AM; the CPSE index was up 5.06 per cent at 4,309 levels. In comparison, the S&P BSE Sensex was up 2.71 per cent at 75,963 levels.