There are two ways to look at the sharp fall in the PSU stocks. One is a short term view over the last one month and the other is a slightly longer term view over the last 1 year. Let us look at it both ways:
1-month view on PSUs:
Over the last 1 month, the big PSU losers have been the downstream oil stocks, especially in the refining and the oil marketing sectors. For example, HPCL and BPCL are down by nearly 15% in the last one month. The correction, in this case, is largely due to the sharp rise in the price of crude oil. Crude has now gotten closer to $74/bbl in the Brent market after Trump has refused to renew Iran sanction exemptions beyond May. That would create a major shortfall in the global oil market. The markets are worried that the Indian government instead of raising the price of petrol and diesel and passing on the burden entirely to the retail consumers in the midst of elections, may ask the downstream companies to absorb some of the burdens. That is why PSU downturn has been led by oil companies in the last month. In fact, the PSU index is down by just 3% in the last 1 month thanks to positive performance in the last month by companies like BHEL, SAIL, Coal India and ONGC.
1-year view on PSUs:
Over the last 1 year, the PSU index has lost nearly 10% but specific pockets have really underperformed. For example, the 2 insurance companies viz. New India and GIC Re have lost nearly 65% in the last 1 year. Both stocks came out with an IPO in 2017 at very stretched valuations and they have been consistently losing market share to the private players. Metal stocks like NALCO and SAIL were also among the major losers in the last 1 year on higher input costs. BEL has also been among the major losers after talks of privatization of the company did not go through and the stock failed to get enough traction from defense orders.
It needs to be noted that PSU banks, which are not part of the above PSU indices have actually had a mixed performance with only SBI and OBC giving a positive performance in the last 1 year.