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Business News/ Markets / Stock Markets/  Budget 2024: PSU stocks soar on capex boost, BSE PSU index sets new record; check how NBCC, NTPC and others are trading

Budget 2024: PSU stocks soar on capex boost, BSE PSU index sets new record; check how NBCC, NTPC and others are trading

PSU stocks continue to surge, with the BSE PSU index reaching a record peak of 18,025 points. The rally is attributed to increased capital expenditure in the interim budget for 2024-2025, benefiting PSU companies.

Today's rally was attributed to the notable increase in capital expenditure in the interim budget for 2024–2025. (REUTERS)Premium
Today's rally was attributed to the notable increase in capital expenditure in the interim budget for 2024–2025. (REUTERS)

The unwavering surge in PSU stocks continues without any indication of slowing down, as they achieved yet another day of triumph by scaling new heights. The BSE PSU index, a barometer of public sector enterprises' performance, experienced a stellar uptick, surging by 5% to establish a new peak at 18,025 points, in today's trade.

Today's rally was attributed to the notable increase in capital expenditure in the interim budget for 2024–2025. Given that PSU companies are among the primary beneficiaries of government capex initiatives, their stocks have continued to flourish in response to this development.

Also Read: Stock market today: Nifty 50 jumps 2%, hits all-time high: 4 reasons why Indian stock market rose today

Building on the massive tripling of the capital expenditure outlay in the past four years, the outlay for the next year was increased by 11.1% to 11,11,111 crore, which is 3.4% of GDP.

Boost to Housing

The government has set an ambitious goal of constructing 20 million new houses over the next five years under the PM Awas Yojana. This announcement has propelled stocks such as HUDCO and NBCC (India), both of which saw a significant jump of over 10% in today's trading session, building on the sharp uptrend observed in the previous trading session.

"Despite the challenges due to COVID, implementation of the PM Awas Yojana (Grameen) continued, and we are close to achieving the target of three crore houses. Two crore more houses will be built in the next five years to meet the requirement arising from the increase in the number of families," said Union Finance Minister Nirmala Sitharaman in her budget speech. 

Also Read: After a strong 2023, FPIs turn net sellers in January; will this trend continue?

Solar Power Boost

Power stocks such as SJVN, NHPC, and NTPC have also seen their stock prices perform well in today's trade after the FM in the budget proposed to assist with the installation of rooftop solar systems for 1 crore houses under the “Pradhanmantri Suryodaya Yojana."

The proposed rooftop solar initiative in the budget is expected to bring about significant benefits for households. Finance Minister Nirmala Sitharaman highlighted that households could anticipate savings ranging from fifteen to eighteen thousand rupees annually. This would result from the generation of free solar electricity for personal use as well as the potential to sell surplus energy back to distribution companies.

Corporate Lending Boom

Concurrently, PSU bank stocks emerged as standout performers in today's trade, driven by the anticipated uptick in corporate lending business following the increase in capital expenditure. Furthermore, the healthy financial results reported by major PSU banks for the December quarter so far have also played a contributing role in pushing their stock value to higher levels.

In today's trade, Punjab & Sind Bank shares jumped 19.7% to 65 apiece; similarly, Bank of India, Punjab National Bank, Indian Bank, Union Bank of India, Indian Overseas Bank, Canara Bank, Central Bank of India, UCO Bank, and State Bank of India are all currently trading with over 2% gains.

Also Read: New Peak! Reliance Industries share price hits another record high; mcap hits 20 lakh crore

Strengthening Nation Borders

Defence stocks are also surging in trade as the defence sector outlay increased to an all-time high of 6.2 lakh crore in the interim budget from 5.94 lakh crore in FY24. However, it's noteworthy that the allocation has only increased by 4.4% YoY in FY25, a lower growth rate compared to the previous year's 13% YoY. Despite this, considering the high base, it's viewed as a positive development for the defence sector.

Ongoing Transformation

Railway stocks, on the other hand, are also witnessing significant gains following the government's announcement in the interim budget of a substantial upgrade to railway infrastructure. The plan involves converting 40,000 normal railway bogies to Vande Bharat standards, aiming to improve safety, convenience, and comfort for passengers.

Notably, a total of 2.55 lakh crore has been earmarked as capex for the Indian Railways for FY25. Overall, the interim budget brought cheers to the street, as in today's trade, both the Nifty 50 and S&P BSE Sensex scaled to new heights.

Commenting on today's market performance, Mr Atul Parakh, CEO of Bigul, said," The Indian markets saw a positive start to February, with the benchmark Nifty 50 and Sensex climbing, gaining at least 1% each. The rally was wide-ranging, with gains across various sectors. It was led by a strong performance from PSU stocks, which have been in the limelight due to government reforms and divestment plans. 

"Positive US market performance may also have contributed to the bullish sentiment. Nifty PSU Banks and Nifty CPSE gained at least 3% each. Individual PSU stocks like SBI, Coal India, and NTPC witnessed significant gains, boosted by optimism surrounding the government's focus on infrastructure development and asset monetization plans," he further added.

Disclaimer: We advise investors to check with certified experts before making any investment decisions.

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Published: 02 Feb 2024, 02:03 PM IST
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