Since its debut the Nifty CPSE (Central Public Sector Enterprises Exchange) index has fared better than the equity benchmarks; however, the exchange traded fund based on the index has seen waning trading interest.
According to Bloomberg data, the Nifty CPSE index has given 17% return since the ETF was launched at an offer price of R17.45 per unit in April 2014. The Sensex has rallied close to 14% during the period. NSE data meanwhile shows that, the five-day average turnover of the product has declined from R42 crore near its debut to about R20 lakh currently.
Of the 10 public sector stocks that the ETF is comprised of, stocks like Indian Oil Corporation (IOCL), Coal India, Container Corporation of India and Bharat Electronics have made impressive gains of the order of 18% to 245%, with the latter two having smaller weightage of 6.4% and 4.8% in the index as of October 31 as per Value Research compilation.
The index could have performed better had ONGC not enjoyed higher allocation of 26.42%. The oil and gas producer, the second most valued PSU after Coal India, has nearly suffered 29% erosion in market value since the ETF was launched last year in the wake of an over 50% drop in global prices of crude oil. Its profitability has remained under pressure with the standalone earnings in FY15 and Q2FY16 having declined 20% and 25%, respectively.
The ETF, which was launched in April 2014 as part of the divestment drive plan for fiscal 2014-15 and raised close to R3,000 crore, has assets worth R2030 crore as of October 31, according to Value Research data. The Nifty CPSE index had a stellar debut with a gain of nearly 11% on the first day. While the formation of the BJP-led NDA government at the Centre also provided good momentum, the barometer subsequently peaked at 27.42 in June last year.
| Subscribe To Our Free Newsletter |
