Select PSU stocks rallied today amid buzz that these companies could soon announce buyback offers. MMTC surged 15 per cent to Rs 44.80, State Trading Corporation of India rose 12 per cent to Rs 102.80 while Dredging Corporation of India advanced 8.4 per cent to Rs 415.70 to be top three gainers in the BSE 500 index.
In comparison, Sensex was down 0.70 per cent in noon trade.
The rally in these companies comes in the wake of two state-run companies NMDC and MOIL recently announcing buyback offers. Shares of NMDC and MOIL had run up ahead of their buyback announcements.
Prateek Agarwal, business head and CIO of ASK Investment Manager, has a positive view on the buyback offers from state-run companies. "It removes the overhang of fresh paper supply into the market which in the past was seen to depreciate the share prices of PSU stocks. Earlier, the market thrashed the share prices of government stocks where disinvestment was announced."
Mr Agarwal also said the buyback programme is also "positive for the market".
"The money is going from the corporates to the investor class who can invest elsewhere," he added.
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