Monday, 30 November 2009

Sundaram Paribas MF bullish on public sector stocks

In order to capitalise on investors' increasing interest on the PSU stocks, including high net worth individuals, retail as well as foreign institutional investors due to their outstanding performances over the last few months, Sundaram BNP Paribas Mutual Fund has floated a new fund offer—Sundaram BNP Paribas PSU Opportunities—to tap the huge potential of the PSUs in the years to come.

The select thematic fund will focus on wealth creation opportunities over the long-term presented by PSUs, said TP Raman, managing director, Sundaram BNP Paribas MF.

The PSUs at present account for about 30% of the market cap on the NSE. The market cap of the PSU sector has risen from about Rs 90,000 crore to Rs 15,10,254 crore in this decade as the PSU stocks outpaced the broad markets as well as private sector players.

"Despite the volatile market conditions over the last one year or so, PSU stocks have performed well than other indices in the markets due to their long-term strategy, better valuation, better dividend payouts and increasing market cap. The income of the top 18 PSUs equal 15% of India's GDP. Therefore we see the NFO will get huge response from one and all and we are bullish on this sector," Raman said.

According to him, "The PSU theme offers trigger of wealth creation, linked to disinvestment, valuation re-rating, growth, privatisation and high dividend payouts. As the government's disinvestment programme progresses, PSUs are likely to become an even larger part of the equity market in India." The PSUs continue to enjoy the dominant position in sectors such as oil, power, gas, banking, insurance and mining, he added.

"We are looking at investing in PSUs engaged in energy, coal and oil but will be more cautious before choosing the stocks," said Satish Ramanathan, head (equity), Sundaram BNP Paribas MF. "We look at investing upto a maximum of 25% on any particular sector and hope to bring in good returns on investments over two to three years, he said.

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