The share of state companies, which generally trail their privately run peers on valuations, surged to about 13% of India’s total market capitalisation in the 551 trading sessions the Sensex took to reach the latest milestone, reflecting the investor perception of a reforms-driven government agenda for state companies in industries as diverse as banking, insurance, infrastructure and manufacturing. Value purchasing also added to the momentum.
By contrast, the market value of the Tata Group rose to ₹27.41 lakh crore from ₹22.48 lakh crore on September 24, 2021, when the index was at 60,000 points. The market value of Reliance Industries advanced to ₹18.61 lakh crore from ₹16.87 lakh crore. The Adani Group saw its market cap rise to ₹14.37 lakh crore from ₹9.78 lakh crore.
“Proactive and positive government initiatives have restored investor confidence in PSU stocks,” said Manish Chowdhury, head of research at StoxBox. “Additionally, a sharper focus on operational efficiencies, improved execution capabilities, and a distinct move toward professional management have instilled a sense of assurance among market participants.”
Public sector companies added nearly ₹26.25 lakh crore in market capitalisation, which includes ₹5.4 lakh crore added by the two newly listed companies – LIC and IREDA. In total, 21 PSUs have surged between three times and more than eight times since September 24, 2021, while another 19 have at least doubled.
“Search for relative value in a rapidly rising market seems to be one of the important reasons for the strong performance of PSU stocks in the recent past as most of them were trading at a significant discount to the private sector,” said Pradeep Gupta, vice-chairman at Anand Rathi Group.