When a storm hits the sea, it is the land that seems to be the safest. In that context, when the virus pandemic hit the world, investors around the country looked towards safe sectors to protect their capital. Out of the many sectors one can stay invested in during these tough times, public sector units (PSUs) are often considered safe bets by many. The high dividend payout that often characterise these stocks is a much-needed relief during times of economic downturn, and hence many investors look to allocate a certain percentage of their portfolio to PSU stocks at any given time. That being said, these stocks have been far from safe havens.
The Sensex rose from the levels of 17,570.82 to 33,780.89 during the past decade, generating an absolute return of 92.26 per cent and an annualised return of 6.75 per cent. But people who invested in PSUs have been left disappointed. The BSE PSU index shrank 47.87 per cent on an absolute basis or 6.31 per cent on an annualized basis during the past 10 years, falling from 9,204.33 to 4,798.04.The performance of the PSUs has not been any different over the short term as well. While the Sensex has dropped by around 15 per cent on a one-year basis, the BSE PSU index lost a massive 37.37 per cent during this period.
On a YTD basis, the BSE PSU index has fallen by 31.35 per cent whereas the BSE Sensex has fallen 18.22 per cent. It was only over the last month that PSUs outperformed the bellwether index. It has been a similar story when it comes to mutual fund investors who relied on the PSU theme. Over the long term, PSUs have not given investors anything to cheer about. Even though some of the PSU-themed mutual funds did better and generated positive returns during this period, these were too meagre to offer any comfort.
This story is from the June 22 - July 05, 2020 edition of Dalal Street Investment Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the June 22 - July 05, 2020 edition of Dalal Street Investment Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
