Indian state-owned enterprises’ equities had an unheard-of rise in FY24, outperforming even mid- and small-cap stocks and becoming the market’s outstanding winners.
This is especially remarkable considering the duress PSU equities were under before to their 2020 bull market surge. The performance of public sector companies is measured by the BSE PSU index, which surged from 9,497 points to 18,274 points, a remarkable increase of 92.4%.
PSU stocks have seen record increases in FY24 thanks to a combination of sector-specific factors and the government’s increased capital expenditure spending. The government increased capital spending in the last interim budget (FY24–25) by 11.1% to ₹11,11,111 crore, or 3.4% of GDP.
Additionally, political stability has become a major factor in FY24, particularly given the expectation that the BJP would win the next Lok Sabha elections in May. Investor optimism has been bolstered by this anticipation, which has raised estimates for steady increase in capital expenditure (capex).
Furthermore, PSU bank shares have received extra support from the government’s goal of keeping the fiscal deficit for FY25 to 5.1%. Their stock values have increased as a result of their strong performance throughout the first three quarters of FY24.
PSU banks saw a notable increase in the first nine months of FY24, with profits rising by 40% to ₹98,358 crore. According to PTI, which cited sources, PSU banks are expected to pay out more dividends than the ₹15,000 crore mark in FY24 as a result of their increased profitability.
In a similar vein, the defense industry has experienced significant growth spurred by higher funding allotments, sizeable order wins, and government programs meant to improve domestic procurement and lessen dependency on defense imports.
