With investors upbeat, CPSE, Bharat ETFs set for good pick up

Last Updated: Thu, Nov 07, 2019 18:08 hrs
Brokers trade on computer terminals at a stock brokerage firm in Mumbai

New Delhi: Prices of central public sector undertakings (CPSE) and Bharat-22 exchange-traded funds (ETFs) are expected to witness a healthy pick up, as public sector undertaking (PSU) stocks bounce back from oversold levels.

Market observers opined on Thursday that the two ETFs have gained investors' attention, especially on the back of attractive discounts and healthy dividend yields.

Consequently, the demand for the two ETFs -- CPSE and Bharat-22 -- may also help the government in meeting its divestment target for the current fiscal.



Since 2014, Centre has been divesting its stake in CPSEs via the ETF route. The last tranches of the two ETFs were oversubscribed with the government raising over Rs 15,000 crore.

"Prices of CPSE ETF and Bharat ETF have seen healthy pick up since September-October 2019, as PSUs bounced from oversold levels, the US-China trade deal showed promise benefiting metal companies and the government's announcement on strategic divestment in companies like BPCL, BEML, SCI etc. ignited buying interest from traders and investors," HDFC Securities' Retail Research Head Deepak Jasani said.

"Discounts to NAV (net asset value), healthy dividend yield, low P/BV, low P/E ratios and proper timing of these issues have resulted in a very good response from investors," he said.

Market analysts also opined that the two ETFs gained attractiveness on the back of improved earnings and government backing at a time of slowdown.


"At the time when the industry going through crisis after crisis, the safest bet is with the CPSEs," an analyst with a leading brokerage house said.

"For a short duration these ETFs offer attractive returns and investment safety."

While the CPSE ETF invests in 11 state-owned companies, the other fund invests in 22 firms.

The CPSEs that are part of the Bharat-22 ETF include ONGC, IOC, SBI, BPCL, Coal India and Nalco.

Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL, NLC India, Axis Bank, ITC and L&T are the other constituents.