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Economy: Its politics,…

Oct 3, 2002

When we ran a poll on whether government will divest BPCL and HPCL recently, 53% of the respondents said the disinvestment will happen within a year, 27% opined that it will happen post 2004 elections and 20% said that it will not happen at all. Perhaps the gut feel of the majority was that the Prime Minister (PM), who has been one of the most vocal backers of disinvestment, would see it through. And sure enough, the PM yesterday made his stand clear on the issue and came down heavily on the opponents of divestment. Hearing the news, both BPCL and HPCL stock prices should have shot through the roof today, but both are up just marginally.

The price movement suggests that though the bourses have heard what the PM has said, they are not too convinced whether the PM can push divestment this time around. Till now, whenever Mr. Vajpayee has been caught in a corner, he has flashed his ‘resignation’ to get his way. However, with the elevation of Mr. Advani as Deputy PM, NDA constituents now see a new power centre. The PM’s detractors too, have taken this as an opportunity to run him down.

Unfortunately, in all this political maneuvering, the ministry that really performed under Mr. Shourie has had to bear the brunt. While Mr. Vajpayee’s tacit backing of disinvestment should have cleared all doubts, the market movement of the oil PSUs suggests otherwise. This is because the markets were also tuned into what the BJP ideologue was saying. With many of the top ministers opposing disinvestment the markets need more than the PM’s statement to feel comfortable.

The answer to this imbroglio perhaps lies in what Mr. Shourie himself remarked yesterday, that divestment progress really lies in the PM and the Deputy PM’s hand. Till now Mr. Advani has not publicly taken a stand either for or against divestment. So in that sense, the ball is really in Mr. Advani’s court. Till such time, retail investors will do well to stay away from speculating on PSUs, and if at all they wish to buy either BPCL or HPCL, the stress should be on fundamentals rather than one man’s whims!

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