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Disinvestment Blues. PSUs in Red.

The deferred PSU disinvestment took its toll on the PSU stocks. And PSU loaded equity funds were not far behind. Devastating for them as the only ray of hope gets blurred.

The government's decision to defer the disinvestment in HPCL and BPCL by three months punctured the bull-run in PSU stocks. The BSE PSU Index has been on fire in 2002 as it hit its 52-week high in June this year and an all time high in April, 2002. On Monday, the BSE PSU Index fell by 111 points over 7% on Monday. Almost all the PSU stocks fell sharply, but the hardest hit were HPCL and BPCL losing 26% and 20% respectively.

In a crumbling market for nearly 30-months now, PSU stocks have been a ray of hope for equity funds. Understandably, funds portfolio in 2002 has increasingly getting loaded with PSU stocks. Equity funds fancy for PSU stocks is reflected in their average 14 percent allocation of their total portfolio. There has been a gradual build up of a sizable position in PSU stocks anticipating further surge in their values. And larger the bet in PSU so has been the zoom in their NAV. But on Monday, it was back to the reality - what goes up comes down. Atleast ten funds lost more than 4% on September 9. The key losers were -- UTI Petro, GIC Fortune '94, Sun F&C Resurgent India Equity, Magnum Contra and Zurich India Taxsaver.

HPCL: Majority of funds, 116 in all has a position in Hindustan Petroleum. The strong believers include -- GIC Fortune '94, JM Basic, Alliance Basic Industries, Canbonus and Zurich India Taxsaver. But there were few lucky funds too which sold every share of HPCL in August. These include Franklin Internet Opportunities which had 4.02% of its assets in the stock, Tata Pure Equity (2.46% in July), Tata Young Citizen's (1.67% in July) and Alliance MIP (0.36%in July).

BPCL: This stock is owned by 80 funds today. And the funds to be badly bruised by its bashing include -- Zurich India Taxsaver, Zurich India Equity, HDFC Growth, Birla Advantage and Franklin India Bluechip. The fund to be luckily out of Bharat Petroleum in August was Relaince Vision.