Popular PSU stocks fell sharply on Monday as Indian benchmark indices dropped due to negative cues. Stocks like RVNL, IRFC, Mazagon Dock, and NBCC were among the biggest losers in the PSU sector.

Sensex and Nifty fell over 2%, while BSE midcap and smallcap indices dropped around 3%. India’s VIX spiked nearly 21% to 17.26. BSE PSU and CPSE indices fell up to 4% early in the trading session.

Global stock market gains were driven by hopes for a US economic soft landing, but these are now threatened by a drop in US job creation, a rise in unemployment, and Middle East geopolitical tensions, according to VK Vijayakumar.

Valuations in India remain high, especially in mid and smallcaps, with overvalued sectors like Defence and Railways facing pressure. The effective buy-on-dips strategy may be challenged, and investors should be cautious.

RVNL was the biggest PSU loser, falling nearly 7.75% to Rs 544.30. IRFC and IRCON both dropped 7% to Rs 178.85 and Rs 265.10, respectively, while RailTel fell nearly 6.9% to Rs 467.25.

NBCC India fell over 7% early in the session, and MMTC was down 6.5% to just above Rs 100. Hudco, Punjab & Sind Bank, and Mazagon Dock Shipbuilders dropped 6% each.

Other PSU stocks like Andrew Yule, BEML Land Assets, Balmer Lawrie, Cochin Shipyard, BHEL, LIC, NLC India, SAIL, Shipping Corporation of India, Garden Reach Shipbuilders, Bharat Electronics, and Hindustan Aeronautics fell more than 5 % each.

PSU stocks have been in the limelight for quite some time now and the total market capitalisation of the BSE-listed companies crossed Rs 100 lakh crore. Many PSU stocks have given multibagger returns during the last few years, and several experts raised a red flag over highly-priced valuations.

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