Morgan Stanley in a Report indicates that it is time for the PSU stocks to rally, excluding PSU Banks
Three things favor PSU stocks. The first is the likely shift in investment style from growth to value – PSU shares dominate value screens. Indeed, as a group, they are trading at multi-year lows versus the narrow index. Most PSU companies operate in cyclical businesses, and we believe that cyclicals will outperform defensives in the coming months, given the likely recovery in growth. The third reason, and the likely trigger for some rerating of these shares, is the government’s proposal to create a PSU ETF. The government has invited bids from asset managers, and we believe the process will completed before the close of this financial year
A close examination of the relative performance of PSUs to the market in 2003-04 and in 2009 is that these stocks led the recovery in the market.
PSU Stocks with more than $1Bn market Cap in Morgan's CoverageONGC
OIL India
BPCL
Coal India
GAIL
IOC
GMDC
PowerGRid
Power Finance Corp
Rural Electric Corp
LIC Housing
