The S&P BSE PSU Index is down about 17% in the last one year and almost 11% this year. While it has had no specific triggers, in recent days the index seems to have hit lows that could hold – going of course by some simple technical indicators. As usual, this blog is to highlight the potential ideas that you might want to investigate and does not constitute a recommendation.
A QUICK BACKGROUND
Bombay Stock Exchange Limited launched ‘BSE PSU Index’ on 4 June 2001.
For consideration of scrips for inclusion in BSE PSU index, the Central Government holding in a scrip should be equal to or more than 51%. Since the BSE PSU index is a subset of BSE-500 index, scrips that form part of BSE-500 index automatically get included in BSE PSU index. This index consists of major Public Sector Undertakings listed on BSE and currently has about 60 odd companies as part of the index.
The Base Date for the BSE PSU Index is 1st February 1999, the date when the BSE-500 was launched. Being a subset of BSE-500, the BSE PSU Index ensures a reasonable history of how the Central Government wealth fluctuated on the bourses. The Base Value for the BSE PSU Index has been set at 1000 to ensure adequacy in terms of daily index movement.
THE TOP 10 COMPANIES
|Company Name||Industry||Last||Change||%Chg||Mkt Cap|
|SBI||Bank – Public||273.95||0.8||0.29||244489.73|
|ONGC||Oil Exploration and Production||127.85||2.65||2.12||160838.87|
|Power Grid Corp||Power Generation/Distribution||203.5||4.15||2.08||106462.85|
|Bank of Baroda||Bank – Public||94.3||0.7||0.75||36274.64|
The Bollinger Bands with a 200 Day length show potential rebounds from current levels and the track record of this indicator is generally good . The 200 DMA lies about 10% higher which is not bad especially from currrent levels – its possible that the average could present resistance – unless a full blown rally starts on the headline indices which could then take returns much beyond the mean.
The MACD histogram shows the first signs of a potential reversal with a positive divergence printed on Friday, Sep 6, 2019, as the green bar shows.
This blog writer also likes to look at the Trix indicator for indices and it does seem that the indicator may just about be starting to reverse?
Finally, and most importantly, the monthly charts on the PSU Index present the current levels as a multi year bottom! If you aint looking very closely at the index constituents now, later might be too late? The chart below is from 2005 so unless we are entering a new all time bear market, current levels are just too juicy to ignore!
The above charts are just used to identify potential reversals and reveal some indicators that may come in handy. So get on to your charting tools and decide whether you are looking at a Santa Claus rally in the PSU Index soon- whether or not the Nifty follows we shall all see, wont we!
You may use our Mobile App (PL Mobile App) to chart your favorite PSU stocks on a live tick by tick basis and track their movements during market hours or put in the trades with your desired stop loss levels.
If you are interested in learning more about technical analysis, contact us at www.plindia.com/placademy or alternatively , if you wish to get in touch with us to open an account or be assisted in stock picking , email us at email@example.com