MUMBAI, FEB 2: It was the day of government stocks on the markets. The government's decision to bring its stake down in public sector undertakings VSNL and CMC to 26 per cent saw the PSU stocks zooming to new peaks. VSNL and CMC led the bull rally and jumped by 16 per cent, the maximum permissible rise in a day. The government itself is the big gainer with the market value of value of its holding in PSU shares jumping by over Rs 4,000 crore. Market sources estimate that the market cap of PSUs has risen by over Rs 9000 crore on Friday. With the government holding over half of the stakes in PSUs, the value of its holdings also soared. "The government plan to sell major stakes in two PSUs raised hopes that India's long-stalled privatisation process is back on the rails," brokers said. Other PSUs like HPCL, BPCL and BHEL followed VSNL CMC and shot up. Shares of both the PSU telecom majors, VSNL (Rs 329) and MTNL (Rs 208.15), were locked at their initial 8 per cent within minutes of commencement of trading after the government cleared divestment of 25% stake in VSNL in favour of a strategic partner. These stocks jumped by another 8 per cent (total rise of 16 per cent) after a cooling period of 30 minutes. The news triggered buying in other PSU shares like HPCL which rose 6 per cent to Rs 190.40, BPCL which gained 13 per cent to Rs 170.90 and BHEL which shot up by over 8 per cent to Rs 174.50. At 10:51 am, the CMC scrip was locked at its 16 per cent upper limit of Rs 355.10 having gained a huge Rs 48.95 in a single trading session from itsyesterday's close of Rs 306.15. The government yesterday decided to bring down its stake in CMC to 26 per cent from 83 per cent. The divestment of stake will be in favour of a strategic partner for which international competitive bidding will be invited. Union divestment minister Arun Shourie was quoted as saying in a section of the press, that it would be desirableto offer the entire 57% stake in the firm in favour of one strategic partner. All these PSU shares have been performing extremely well on the bourses on talks of divestment and they got a further boost after the government, yesterday, cleared divestment in VSNL and CMC both in favour of a strategicpartner. This, on the reckoning that the divestment will unlock susbtantial value to the shareholders of the PSUs. "It marks a good beginning and the government should keep the momentum going," said an analyst with IDBI Principal Asset Management. The market sentiment remained unaffectd in spite of the 2 per cent income-tax surcharge, announced by the Finance Minister on Thursday. Reflecting the trend, 30-share BSE Sensex opened at 4280.96 points (which happened to be the day's low), touched the day's high of 4376.40 points before closing at 4352.26 points, showing a net gain of 66.15 points from the previous close of 4286.11 points. FII inflows cross Rs 5,000 cr MUMBAI:There is more good news for investors. Portfolio investments by foreign institutional investors (FIIs) have crossed Rs 5,000 crore in the Indian bourses and that too within the 24 trading sessions of the calendar 2001. The net FII investment in 2000 was US $ 1.492 billion while it has already reached 70 per cent of the last year's investments in less than 30 trading sessions. According to analysts, the main reason behind the increased FII inflows is the slowdown of the US economy and cut in Fed Reserve rates. Simultaneously, the decision of interest cut has made investments in US more unattractive even in fixed income generating instruments. "If this trend in FII investment activity continues, our markets may enter a prolonged bull phase," said a dealer.
