Shares of public sector enterprises could find themselves at the receiving end on Dalal Street in the run-up to the Union Budget if history is a parameter to gauge their performance.

Of the 101 listed public sector enterprises (PSE or PSUs), more than 50% of them have given negative returns 1 month prior to the Budget in at least 6 of the last 10 years, data from Ace Equity showed.
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Most of the public sector banks have joined this list, including index major and the country’s largest lender

.

The uncertainty over the planned capital infusion by the government in the state-owned banks and mergers of smaller banks with the bigger ones were the factors weighing on the stocks in the previous years.

Besides banks, fertiliser companies were dumped by investors in view of no clarity on the likely subsidy the sector would receive in the ensuing financial year.

Amid uncertainty over the likely allocation to the defence sector, shares of several electrical equipment and defence equipment makers have borne the brunt of selling ahead of the Budget. These include names like

& Co,

, Bharat Electronics, and Bharat Heavy Electricals.

Stocks in the power and mining sector have also languished, with MOIL,

,

,

,

, and Orissa Mineral Development Corp giving negative returns prior to the budget in at least 6 of the last 10 years.

The energy pack has also not done well in the run-up to the budget, particularly in the recent years, given the lack of clarity over the progress of the strategic divestment plans of the centre.

The government has been unable to proceed with the strategic disinvestment of Bharat Petroleum Corp,

, and

due to regulatory challenges and adverse market conditions.

The long-pending merger of Bharat Sanchar Nigam and

is yet to happen and that has been weighing on the shares of the latter.

What should investors do?


While historical data shows that most stocks in the PSE segment have languished, the outlook for many sub-sectors have improved significantly due to various policy measures by the government and the increased capital investments.

The production-linked incentive scheme announced by the government for domestic manufacturing has bolstered the outlook for companies in the automobile, defence, engineering, infrastructure, electronics, and communications sectors.

Manufacturing is a theme that is gaining momentum in India, and most analysts are betting on that in 2023.

“We expect the budget to strongly focus on economic growth and development while also promoting the government’s popular initiatives like Aatmanirbhar Bharat and Make in India,” said Raghvendra Nath, managing director at

Wealth Management.

Nath recommends investors to accumulate stocks in the infrastructure and logistics sectors.

Rajesh Kothari, WealthBasket curator, founder & MD of AlfAccurate Advisors also expects higher allocation for capital investments in the upcoming budget.

“The government has done a great job by actually spending big on capex across different sectors during the 3-4 years. With PLI firmly in place, I think it is now the private sector that will take the baton ahead for capex,” Kothari said.

Most analysts also expect the Budget to lay further emphasis on renewable energy and expect some more measures, given the government’s focus on sustainability in the longer term.

Therefore, stocks such as NTPC, which is building its renewable portfolio through its subsidiary, could see some traction ahead of the budget.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)