Stocks of firms linked to divestment plan rise

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Regardless to the volatility in the markets, the state-run companies linked to the government’s divestment plan surged on Friday as a decisive verdict for the ruling BJP in Assembly polls cheered investors. Market participants are of the view that the victory of the BJP in four out of five states would enable it to further push the privatisation agenda.

The government is now likely to pursue privatisation of refiner Bharat Petroleum Corporation (BPCL), some state-run banks and assets and land owned by some public sector companies, Jefferies wrote in an investor note. “Political success should also imply that the government’s spending direction in favour of infrastructure should see no change,” the brokerage said.

Shares of BPCL rallied as much as 3.7% on the NSE to hit a three-week high of Rs 362. While Dredging Corporation of India and IDBI bank gave up intra-day gains to close marginally lower, BEML rose 0.6% to end the day at Rs 1,482. The other disinvestment candidate, BHEL, surged 1.7% to end the day at Rs 51.90. The stock has returned 5.5% in the last one week against the Nifty50’s gain of 2.4%.

The electoral outcome was achieved without any fiscal sops being handed out in the FY23 Budget, i.e. by staying fiscally prudent when compared to some major economies, observed ICICI Securities. “This bodes well for India’s economy in the near term,” the domestic brokerage wrote in a note.

Last Wednesday, the Union Cabinet had approved formation of the National Land Monetisation Corporation as a wholly owned government of India company to fast-track monetisation of land and non-core assets of public sector entities. The corporation will undertake monetisation of surplus land and building assets owned by CPSEs and other government agencies.

The Nifty50 ended the day with a marginal gain of 0.2% to close at 16,630.45 points.