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Journalism of Courage
Angry investors reacted to the government’s decision to put off the sale of oil PSUs Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) by selling off over 131 lakh shares of the two PSUs alone.
As a result, prices of HPCL shares fell by over 26 per cent, and those of BPCL by over 20 per cent — combined, this resulted in the value of these stocks falling by a whopping Rs 3,950 crore.
And, since most believed Saturday’s decision of the Cabinet Committee of Disinvestment (CCD) would result in slowing down the entire privatisation process, shares of other PSUs also plunged today. Together, the market valuation of all PSU shares fell Rs 11,700 crore today — the value, or market capitalisation, of all PSUs listed on the Bombay Stock Exchange fell by 8.49 per cent today.
Traders said investors were nervous and worried about the government’s latest move to go slow on divestment, saying this reversal of policy would stifle the country’s reform programmes. ‘‘The market was in a nervous state ever since George Fernandes and Oil Minister Ram Naik campaigned against divestment in oil companies last week,’’ said BSE dealer R A Poddar.
Apart from the decision on HPCL and BPCL, the CCD also put off plans to sell minority equity stakes in IOC, ONGC, and NTPC. This has raised questions about the progress of the divestment process, which has been the key driver for the market this year.
Other PSU pivotals like MTNL were down 5.96 per cent, Bhel was down 2 per cent, State Trading Corporation 10.83 per cent, Nalco fell 10.14 per cent, Container Corporation 10.39 per cent, Bharat Electronics 7.54 percnet, Engineers India 6.23 per cent, Shipping Corporation 5.67 per cent, Gas Authority of India 4.64 per cent, ONGC 4.69 per cent and Indian Oil was down 4.04 per cent.
The sell-off in PSU stocks sent the entire market into a tailspin and the benchmark BSE Sensex shed 51.64 points, or 1.63 per cent, to settle at 3,089.47. ‘‘Investors are in no mood to compromise. They want nothing less than privatisation to go on and an assurance about the government’s commitment,’’ said a fund manager. ‘‘The privatisation delay has hurt sentiment. Investors are now waiting with bated breath for the government’s next move,’’ said Gul Teckchandani, chief investment officer with Sun F&C.
Though the impact has not spread to other sectors right now, investors fear sustained downslide in PSU stocks. A few of them had already fallen substantially in a couple of weeks before the CCD’s decision last Saturday, leading to depressed sentiment on the bourses.
MTNL, for instance, fell by over 9 per cent last week on Monday (Sept 2) after telecom minister Pramod Mahajan said he was considering merging MTNL with BSNL.
Reports of oil minister Ram Naik opposing the sale of HPCL and BPCL last week also saw prices of these stocks tumble.
Interestingly, till today, the BSE index for PSU firms had risen about 74 per cent this year — this against a nearly three per cent slide in the Sensex. ‘‘Share prices of PSUs had gone up significantly in the last one year following the successful divestment in IPCL, IBP, CMC, Balco and VSNL. Now there is a breach of confidence… divestments in other firms such as NALCO and SCI would slow down in the months ahead as the government would shy away from tough decisions,’’ said a leading BSE broker.
