Cochin Shipyard, Mazagon, HUDCO, RVNL, Ircon, BDL: PSU stocks recover after selloff, gain up to 10%

Shares of Cochin Shipyard Ltd, Mazagon Shipbuilders Ltd, HUDCO Ltd, Rail Vikas Nigam Ltd (RVNL) and Ircon International led the PSU gainers, rising up to 10 per cent, a day after witnessing steep falls.

Many PSU stocks trade at expensive valuations, leaving little room of error. Thursday's fall in PSU shares was seen as the market was uncertain whether the US Fed with its 50 basis points rate cut hinted at a imminent slowdown ahead. But the data showing less-than-expected US jobless claims overnight boosted sentiment globally.

Cochin Shipyard shares surged 10 per cent to lock at their upper circuit limit of Rs 1,846.55. HUDCO soared 7.79 per cent to Rs 248.30. Mazagon Shipbuilders saw its shares rallying 7.14 per cent to Rs 4,349. Rites gained 6.15 per cent to Rs 363. This stock tuned ex-bonus today. Ircon International and RVNL gained 6 per cent each.

BEML, Bharat Dynamics Ltd (BDL), IRFC, BHEL, Engineers India Ltd, Coal India and Hindustan Aeronautics Ltd (HAL) were some other PSU stocks rising up to 6 per cent. The BSE PSU index was trading at 20,695.29, up 225.46 points or 1.10 per cent. The index fell 1.34 per cent in the previous session.

The index is up 32 per cent in 2024 so far and 65 per cent in the past one year.

"The PSU basket has experienced an exceptional run in recent years, said Ajit Mishra - SVP, Research, Religare Broking Ltd.

"Sectors such as defense, railways, and capital goods are trading at high valuations driven by expectations of strong earnings growth. Investors should exercise caution, as any shortfall in these expectations could negatively affect valuations," Mishra said in an interview to Business Today Markets.
Santosh Meena, Head of Research, Swastika Investmart said midcap and smallcap segments, particularly sectors like defense, railways, and capital goods, which have performed exceptionally well over the past 2-3 years, are now witnessing a sharp correction.

"Valuations have long been a concern in the broader market, yet these stocks continued to rally despite being considered expensive. However, there always comes a point when market euphoria fades," he said.