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PSU Stocks - Perpetual Value Traps?
Mar 14, 2019


It's election time and PSU stocks are back in vogue.

The last election saw a short-term outperformance of the PSU Index compared to the Sensex.

Will history repeat itself?

What we have seen from history, is that PSUs have underperformed the overall markets in the long run.

Non-performing assets (NPA) in the banking space and rising crude oil prices impacting oil marketing companies have all taken a toll in recent years.

On top of that, when the government is in desperate need of money, they turn to PSUs. This usually leaves minority shareholders shortchanged.

Not all companies in the sector can be ignored. But most of them turn out to be value traps.

A better alternative is to look at quality companies which are not restricted by regulatory hurdles.

Data Source: BSE India

This Chart Of The Day was published in The 5 Minute WrapUp - 2 Things You Need to Do in This Market Rally

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