PSU Stocks Fall: Mazagon, RVNL, Cochin Shipyard Drop Up to 8%; Know More

Shares of the PSU pack, a recent favorite among investors, suffered significant losses during the market selloff, with RVNL, IRFC, Mazagon Dock, and NBCC experiencing declines of up to 8% on August 5.

The BSE PSU and CPSE indices fell by up to 4%, mirroring the decline in the Sensex and Nifty, with all components trading in the negative.

The downturn was largely due to weak global signals, as disappointing US job data sparked concerns about a possible recession in the US. Additionally, there are fears of a reverse carry trade in the Yen following a rate hike by the Bank of Japan.

Despite the current negative market sentiment, the long-term outlook on India's growth trajectory remains positive, supported by strong macroeconomic fundamentals, according to Atul Parakh, CEO of Bigul.

Rail Vikas Nigam (RVNL) was the hardest hit in the PSU pack, dropping nearly 8%. Indian Railway Finance Corporation Ltd and IRCON International Ltd each fell by 7%, while RailTel Corporation dropped nearly 7% during trading on August 5. Shares of Mazagon Dock Shipbuilders declined over 6.5%, consistent with the broader sell-off in state-run entities and the overall market.

Shares of Cochin Shipyard, Shipping Corporation of India, and Garden Reach Shipbuilders Ltd. were all locked in a lower circuit of 5% each. The stock of Great Eastern Shipping Company also decreased by nearly 5%.

Defense PSU stocks such as Bharat Dynamics, Bharat Electronics, Hindustan Aeronautics, and BEML also saw declines of up to 6%. NBCC India Ltd fell over 7% in the early session, while MMTC dropped by 6.5%. Housing & Urban Development Corporation (HUDCO) also fell by 6%.

Other key PSU stocks, including Life Insurance Corporation of India, BHEL, SJVN, NLC India, GIC, SAIL, Coal India, Power Finance Corp, and Hindustan Copper, each tumbled around 6%.

Atul Parakh advised investors against entering the market immediately, suggesting that better entry points will emerge. "Investing in fundamentally strong companies in high-growth potential sectors at appropriate valuations is recommended. However, profit booking in over-valued stocks is advisable due to the current market situation," he stated.

Given the prevailing bullish trend, prices are unlikely to stay low for long. A recovery from lower levels is likely, according to Vishnu Kant Upadhyay, AVP of Research and Advisory at Master Capital Services.

"Every market decline should be seen as an opportunity to establish new long positions for long-term holding," he told Moneycontrol.