Disinvestment talks may spur buying - Views on News from Equitymaster

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Disinvestment talks may spur buying

Nov 20, 2000

The government seems to have made up its mind about disinvesting from oil and telecom public sector units (PSUs). Funds that had ignored PSU stocks in the past may now want to take another look at them.

Open-ended Growth FundsDate of holding% HoldingNAV (Rs)
 Alliance Basic Ind. (Gr)31 Oct,2000 9.48.4
 Birla MNC Fund (Gr)29 Sep,2000 7.029.0
 Canbonus30 Sep,2000 6.69.5
 Templeton Growth Fund31 Aug,2000 5.011.8
 Zurich (I) Top 200(Gr)29 Sep,2000 4.912.6
 K P Balanced (Gr)31 Oct,2000 3.98.2
 Sundaram Tax Saver31 Oct,2000 3.59.1
 K MNC10 Nov,2000 3.59.1
 Sundaram Growth 31 Oct,2000 3.412.9
 Pru ICICI Tax (Gr)29 Sep,2000 3.012.3
 Alliance Equity Fund (Gr)30 Sep,2000 3.035.8

For long oil PSUs were snubbed by fund managers given the government’s indecisive stand on disinvestments. So we had fundamentally solid stocks like HPCL and BPCL languishing at price/earnings - P/E of 4-5 and there were still no funds buying such stocks. In our talks with fund managers, we realized that funds would not accumulate oil PSUs until the government was categorical on the disinvestment issue that had plagued the industry for quite some time now.

Now that the government has come out with some definite plans for disinvestment, one can expect to see funds accumulate oil stocks with some fervour. MTNL and VSNL are also likely to witness some buying interest given the government’s decision to lower stake in these companies.


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