PSUs face selling pressure amid Nifty CPSE rejig

Traders dumped shares of various public sector companies due to rebalancing in the Nifty CPSE (Central Public Sector Enterprises) index and expectation of a follow-on public offer of CPSE ETF in the coming days. The Nifty CPSE index was the worst performer among indices, ending down 3.6% at 1,788.45. ONGC, Coal India and NTPC fell 4-5%. The Nifty CPSE index revision will be effective from January 23. IOC and PFC are likely to exit the index while Power Grid, NHPC, NMDC and Cochin Shipyard will be included.

The buzz in the market is that there will be a follow-on public offering of CPSE ETF that would result in higher supply. The buzz of another round of CPSE ETF resulted in shares of ONGC, Power Grid, NTPC and Coal India, which are expected to constitute bulk of the weightage in the ETF, bearing the biggest brunt of the bears. Market participants think investors may opt to buy in the ETF issue and simultaneously short the index components in the futures segment.